Tesco boss Clarke says could pull out of US if no improvement

Tesco chief executive Philip Clarke says that the company will pull out of the United States if it sees no chance of success.

Mr Clarke was responding to calls from shareholders over the merits of its US business operation at its annual general meeting.

Tesco was called upon by a trade union group to review the strategy of its loss-making American operation, Fresh & Easy. The Change to Win Investment Group, an organization that advises US-based trade union-sponsored pension funds asked Tesco to set up a committee of non-executive directors to review the strategy and future of Tesco’s US operations.

Chairman, Richard Broadbent rejected the calls and told shareholders that they would not be setting up the proposed committee. Fresh and Easy made a loss of £186 million in 2010 and a loss of £153 million in 2011.

Michael Zucker from Change to Win said: "Investors will no doubt be troubled that the company seems calmly willing to continue making losses in the US, as it has since the launch in 2007."

At the meeting Mr Clarke said that if Tesco sees no hope of turning the business around, it will exit that market, as it has done in Japan.

Meanwhile, Tesco has won overwhelming support for its remuneration deal with 96.9 per cent of shareholders voting for the report at its annual shareholder meeting in Cardiff.

The decision is a boost for the supermarket chain which has suffered a difficult year since Philip Clarke replaced Sir Terry Leahy as chief executive and comes despite a call from pension fund consultants Pirc for investors to vote against the pay deal.

Mr Clarke used his address to explain to shareholders the progress he believes Tesco is making in revitalizing its UK operations, which accounts for 70 per cent of its total bonus.

Mr Clarke agreed to waive his £372,000 bonus after the company suffered its first profit warning for more than 20 years in January and a fall in its share value.

Mr Clarke, responding to calls from the floor that he should resign if things don’t improve for the business in the UK, said he agreed that Tesco had taken its eye off the ball and had “allowed the shopping experience to become less appealing in a difficult economic environment”.

The last few months has seen a growing rebellion from shareholders against the pay policies of some big companies. The so-called “shareholder spring” has seen Aviva shareholders oust boss Andrew Moss and other big companies such as Trinity Mirror to suffer defeats or strong rebellions against their pay policies.

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