UK retailer Tesco has announced plans to enter the US market next year. The company is to launch a convenience store format initially on the West Coast.

Tesco said it expected its US operation to break even by its second full year of operation, with a planned capital investment of GBP250m (US$435m) a year, to be funded from existing resources.

Tim Mason, the group’s marketing and property director, is to be relocated to the US to head up the new business.

Reports have suggested that the format will be modelled on the successful Tesco Express format, which the company now operates in five countries, but chairman Terry Leahy said the US stores will trade under a different name rather than Tesco or Tesco Express.

However, Leahy would not be drawn on what the new US brand name would be.

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By GlobalData

In spite of the fact that the US is a mature and highly competitive retail market, Leahy said that having studied the market for a number of years, Tesco had developed a concept that would be successful there.

“With the new format we now think we can expand and be profitable in America,” Leahy was quoted by Dow Jones saying.

“We never thought we had the right format before. We know we can’t just transplant the UK model or copy other models that are already there.”