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Tesco Confirms It Could Pull Out Of US

(c) Sky News 2012

Tesco (Xetra: 852647 - news) has confirmed a review of its loss-making US operations with "all options under consideration" as it attempts to convince the City on its wider turnaround plans.

The move, which was exclusively revealed by Sky's City Editor Mark Kleinman last night , prompted a 4.6% surge in its share price in early trading.

The plan could see Britain's biggest retailer either close or sell all of its American stores, which trade under the Fresh & Easy brand

Tim Mason, the chief executive of Fresh & Easy, is to leave the company today after a career of over 30 years, Tesco said.

Tesco confirmed too that its battle to retain strong market dominance in the UK remained strained as like-for-like sales, excluding fuel and VAT, fell 0.6% in the third quarter - figures which pile more pressure on the supermarket giant's boss, Philip Clarke.

In his statement confirming the review, Mr Clarke said: "My role is to deliver long-term value for shareholders. Following a year in which my priority for Fresh & Easy was to improve its performance, I have now made a fully informed assessment of its long term potential.

"Whilst the business has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities. I have therefore decided to conduct a strategic review of Fresh & Easy with all options under consideration."

Fresh & Easy currently operates approximately 200 stores employing 5,000 people.

The brand was launched in 2007 but has never made a profit, losing several hundred million pounds overall - £74m in the first half of this year alone.

Kleinman reported that Mr Clarke was already under pressure because of the group's sluggish performance in its home market which resulted in a £1bn transformation programme focused on improving customer service and the availability of fresh produce.

While Tesco had been treading water under its new boss, rivals including J Sainsbury and Waitrose have been performing strongly though there are signs of progress with grocery sales growth outperforming the market.

Regarding Tesco's turnaround attempts, Mr Clarke said today: "I am pleased with the performance of our food business in the UK.

"Our six-part plan is about improving the shopping trip for customers for the long term and this is a positive early sign. We've now refreshed nearly 300 stores, upgraded or introduced well over 3,000 products and added innovations such as Delivery Saver to our already successful online grocery business."

He described general merchandise sales as "not good enough".

Despite the tough non-food trading, Tesco's fightback against its resurgent rivals has not gone unrewarded as market share data from Kantar Worldpanel on Tuesday revealed that Tesco had seen the best sales growth of the "big four" players in the four weeks to November (Xetra: A0Z24E - news) 25 and grew its market share.

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