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Tesco to Sell Fresh & Easy Chain, Profits More Than Halve

Tesco to Sell Fresh & Easy Chain, Profits More Than Halve

London, UK
By Eric Anderson

Tesco has confirmed the sale of its Fresh & Easy chain, and has had the worst financial performance in its history. Full year pre-tax profits more than halved, on the heels of its decision to exit the U.S. and UK-driven profit warnings last year, which spurred $3.66 billion in writedowns.
Tesco said that its failed U.S. foray, Fresh & Easy, resulted in the loss of $1.5 billion. Additionally, it was hit by a $1.2 billion property writedown for projects in the UK it has decided not to pursue, as reported by the London Financial Times.
The company indicated that it decided to take the charge in the UK because it has made a move away from the construction of large stores and has turned in the direction of online and convenience shops.
“We are going to build some [big stores] but we are going to build less, and some of the investments we made in previous years we don’t think we should be building because quite frankly the world has moved on. It’s moved to a multi-channel world,” said Philip Clarke, Chief Executive.
Before the charges, Tesco’s underlying profit fell 14.5 per cent to $5.42 billion – the first annual profit fall in 20 years – as it counted the cost of the problems in the UK, which prompted its first profit warning in decades in January 2012.
Clarke said the decline in profits reflected the fact that the retailer had “undergone fairly fundamental strategic change all aimed at positioning Tesco for future growth”.
Laurie McIlwee, Finance Director, said efforts to exit the US market were “going well”, but it could be “at least another three months before we are able to conclude the process.”
Tesco Report