Tesco back out of the US while taking losses
UK’s biggest retailer Tesco is on the verge of retreating from the US after pouring $1 bn dollars into the country with an ambition to take on retailing giant Wal-Mart. After working for 30 years with the organisation, Deputy Chief executive Tim Mason, who heads the Fresh and Easy chain is going to quit the company. Tesco shares soared 4% higher on Wednesday November 5, 2012, as the move was appreciated by financial analysts
With the loss, the company is compromising with their great American dream. The chief executive of Tesco, Phil Clarke, didn’t give any confirmed statement on moving out of America, but he mentioned that there are good offers for sale of the Fresh and Easy chain in parts or whole. This is also for being partners in the development of the business.
The Workers’ Union in the US is not reacting positively at the news because of the huge number of job losses that could result. The move comes in just prior to the festive season, which they claim could have been avoided if Tesco would have addressed the many underlying problems and warning signs before it was too late.
Not only in the US, but in their homeland as well have Tesco’s shares fallen 19%. The mainland European stores are hit by the Euro crisis, whereas the Asian stores like in Korea, business are affected by new laws. The limiting trading hours and the slower growth of china are not helping them either.
Analysts are downgrading the firm, suggesting shareholders should sell Tesco shares while surveys show Tesco as less preferred by customers, as they are becoming less competitive as the years go by.