The UK’s largest grocer Tesco must look hard at its Fresh & Easy operation in the US, according to billionaire investor Warren Buffett.
Buffett, who holds a three per cent share in Tesco, was talking at a shareholders conference in Omaha, Nebraska, and said that the retailer was foolhardy to enter the world’s largest grocery market.
In comments reported by both The Times and Telegraph, the businessman did acknowledge however that sales have been improving for Fresh & Easy and, in Deputy CEO Tim Mason, the company has “a smart guy at the top” to potentially make a success of its business in the US.
Last month Tesco announced its financial results for the year ending February 26th 2011 showing that the retailer’s US operation made a loss of £186 million during the 12 months – an increase on the previous year.
Sales on that side of the Atlantic were up 41.8 per cent to £502 million though, and CEO Philip Clarke is planning to speed up the rate of store openings in the months ahead.
“We expect losses to reduce sharply in the current year as strong growth in like-for-like sales continues and improved store operating ratios start to deliver individual shop-door profitability,” he explained.
“Despite the higher losses in 2010/11, the overall business remains on-track to break even towards the end of the 2012/13 financial year.”