CARDIFF, Wales — Tesco told shareholders it will shut down the Fresh & Easy Neighborhood Market chain if it continues to disappoint, according to published reports.
Speaking at the company's annual meeting here Friday, Philip Clarke, Tesco's chief executive officer, said, "If we see there is no chance of success, we'll do as we've just done in Japan," referring to Tesco's decision last year to leave that market. "It is not about ego — we are businessmen."
The company rejected calls from Change to Win for an independent review of Fresh & Easy. Change to Win, an investment group that advises union-sponsored pension funds in the U.S., had asked the company to establish a committee of non-executive directors to review Fresh & Easy's future and set fixed benchmarks to measure its success.
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"We will not be doing that," Richard Broadbent, Tesco chairman, told the meeting, explaining the full board reviews the strategy regularly. "We're not hiding anything at all on Fresh & Easy," he said.
Earlier this year Clarke rejected calls from some large shareholders for Tesco to pull out of the U.S. In April he said the U.S. chain is expected to break even by early 2014, a year later than the company's earlier target of 2013.
Following the meeting, Michael Zucker, director of retail initiatives for Change to Win, said, "The company keeps stating its confidence in Fresh & Easy's future, with little qualification. We believe Fresh & Easy is suffering from a wide range of operational failures and lack of clear strategic direction. All that we ask for from the board is greater transparency and an acknowledgement that there is significant investor anxiety about the performance of the U.S. business and the lack of a clear strategy to address its problems."