CARDIFF, Wales -- Tesco PLC promised to pull the plug on its loss-making Fresh & Easy chain in the United States if it continued to disappoint, and rejected renewed calls for an independent review of its strategy for the venture, reported Reuters.
"If we see there is no chance of success, we'll do as we've just done in Japan," said chief executive Philip Clarke, referring to Tesco's deal this month to exit that market.
"It is not about ego, we are businessmen," he told the British grocer's annual meeting in the Welsh capital, Cardiff, on Friday.
The Change to Win Investment Group, which advises U.S. trade union-sponsored pension funds, during the meeting asked Tesco to establish a committee of non-executive directors to review Fresh & Easy's future and set fixed benchmarks to measure its success.
"We will not be doing that," responded chairman Richard Broadbent.
He said the strategy for Fresh & Easy was regularly reviewed by the whole board, with the retailer providing full disclosure on the business in its annual report and accounts.
"We're not hiding anything at all on Fresh & Easy," he said.
Change to Win's request was "union motivated and follows several years of union opposition to our business, Brendan Wonnacott, Fresh & Easy's director of neighborhood affairs, told CSP Daily News.
In April, Broadbent said he did not expect the chain to break even until its 2013/14 financial year, against a previous target of 2012/13.
This month, Tesco reported underlying sales growth at Fresh & Easy slowed to 3.6% in its first quarter from 12.3% in the fourth quarter of last year.
"What shareholders want to know is, where is Fresh & Easy going and how much will it cost to get there?," Michael Zucker, Change to Win's director of retail initiatives, told Reuters.
Once one of the most consistent British companies in terms of earnings growth, London-based Tesco stunned investors in January with its first profit warning in more than 20 years, saying it needed to invest heavily to stem a steady decline in U.K. market share.
El Segundo, Calif.-based Fresh & Easy Neighborhood Markets Inc. operates about 150 stores in California, Arizona and Nevada. In addition to fresh prepared meals, meats and produce, it offers national brand products and household items. The chain's fresh&easy brand products have no artificial colors or flavors, no added trans fats, no high-fructose corn syrup and only use preservatives when absolutely necessary.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.