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Bloomberg BusinessWeek reports that Tesco CEO Philip Clarke said this morning that the company “will invest 1 billion pounds ($1.6 billion) to revive sales at home, while slowing expansion in other parts of the world as it makes a domestic turnaround its first priority.” Tesco has been slowly losing market share to almost all its UK competitors, and recently reduced its profit guidance for the first time in two decades.

In addition, Clarke said that the timetable for its Fresh & Easy US division to move into profitability has been extended by a year to fiscal 2013, and he said the company “will focus on making the existing 185 stores in the country profitable before expanding the business further.”

Clarke said, ““I was quite prepared to think it wouldn’t work, but I’m not in that place now ... We’ll be able to push it over the line.”

According to the story, Clarke said that “U.K. stores will be given a ‘warmer look and feel,’ while the company will also add 8,000 supermarket workers, and pump 150 million pounds into expanding its online offer ... The retailer said 430 supermarkets, representing more than a quarter of its U.K. selling space, will be revamped this year. Grocery ranges will be overhauled, with the 1 billion-pound Value line due to be relabeled as Everyday Value and more than 2,000 new standard products being introduced by April 2013.

“Tesco plans to double its online offering of non-food goods to 80,000 lines by Christmas and will extend its Click & Collect business, where shoppers pick up purchases in store, to 1,600 outlets including Express convenience stores.”

“The plan isn’t radical, but it’s a radical change of pace,” Clarke said on a analysts call, adding, “We remain confident of making modest progress this year despite the substantial planned revenue investment.”

The story also says that “Clarke dismissed suggestions that large-format hypermarkets are a dead format. ‘The future of the hypermarket is going to be a little bit more food, with general merchandise and clothing,’ he said. ‘This is about responding to the internet and customers rather than saying the hypermarket is over, which it isn’t’.”
KC's View:
Not quite sure what to make of Clarke’s comments about Fresh & Easy ... it sounds like he was prepared to pull the plug and sell the division, but got convinced - probably by US chief Tim Mason - that the US business is gaining the kind of traction it needs to get profitable.

I would suspect, however, that this is the last extension, the final leap of faith that a Tesco CEO is going to make when it comes to Fresh & Easy.