The shareholders of one supermarket chain have called for a scaling back of its banking business and its ventures in the UK, reminding the company that it needs to focus less on providing current accounts to consumers but on rebuilding its stagnant retail business at home, sources say.
Tesco’s foray across the Atlantic has been dubbed as a disastrous one, according to insider reports, just ahead of Phil Clarke, the supermarket group and savings account provider’s chief executive, plans to reveal Tesco’s future growth programme. Investors, such as 4 per cent stakeholder Legal & General Investment Management, are growing tired of the supermarket group’s identity crisis, with one fund manager stating that Tesco needs to re-think exactly what direction the company wishes to take.
The distinction must be made between focusing on its primary business of supplying groceries to British consumers or by trying to branch out to take on new and possibly risky roles, fund manager Richard Black said. One of the results of such introspection would doubtlessly lead to an examination of Tesco’s banking business and its attempt to break into the US market.
The disastrous results of the Fresh & Easy brand in the UK cannot be overstated, one anonymous Tesco institutional investor also said. The supermarket giant should have retraced its steps much faster when it did once the level of losses had become prevalent, the investor also said, and with an £800 million investment on top of £500 million in trading losses since the brand’s 2008 launch, many point to places the funds could have gone instead, such as Tesco stores at home instead of abroad.
Tesco’s banking division has also been plagued with problems, and has not yet been able to provide the current accounts it has been promising its customers. These two issues have contributed to Tesco issuing its first profits warning in 2 decades this past January, with its shares tumbling more than 20per cent over the last 12 months.