Tesco is facing a bill of about £1bn to quit its loss-making Fresh & Easy business in the US.
9:30PM BST 07 Apr 2013
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The size of the charge, which will be in the form of a writedown in the value of Tesco’s assets, highlights the torrid time that Britain’s biggest retailer has faced in the US since opening in 2007.
Philip Clarke, the chief executive, is set to confirm in the company’s full-year results next week that Tesco will exit the US after launching a strategic review last year.
However, this will come at the cost of a writedown on the value of Tesco’s investments in the country, including the wholly-owned stores, leases and a major distribution centre in Riverside, California.
Mr Clarke is understood to be working on the sale of the business – with Aldi one of the potential buyers – but a closure of Fresh & Easy and then a piece-by-piece sale of the assets remains the most likely outcome.
Tesco may not reveal the future of Fresh & Easy in the results, but in order to break with the past and underline its determination to leave the US, it is understood that the FTSE 100 company will book a substantial impairment.
Tesco is the third biggest retailer in the world. Under Sir Terry Leahy, it built successful businesses in countries ranging from Ireland to the Czech Republic, South Korea and Thailand.
But Fresh & Easy will go down as one of Sir Terry’s and Tesco’s biggest failures. Other retailers to have suffered in the US include J Sainsbury and Marks & Spencer.
Mr Clarke has been under pressure to review the loss-making Fresh & Easy since taking over from Sir Terry in March 2011.
Last October, Mr Clarke halted new store openings in the US and then announced two months later that Tesco would begin a strategic review because Fresh & Easy “will not deliver acceptable shareholder returns on an appropriate time frame in its current form”.
Mr Clarke said: “This has not been an easy decision but I know it’s the right one.”
Tesco declined to comment on Sunday night.