Britain’s Tesco, the world’s No. 3 retailer, has launched a strategic review of its loss-making US chain Fresh & Easy that could lead to a sale or closure of the business.
Announcing the review alongside a third-quarter trading update that showed the continued pressure on Tesco’s home market, the group said it would report the findings of the review when it issues full-year results in April.
It said all options were under consideration for the business and it has appointed Greenhill & Co to assist in the review.
Tesco said it has had a number of approaches from parties interested in acquiring either all or part of Fresh & Easy, or in partnering with the firm. It added that Fresh & Easy CEO Tim Mason is leaving Tesco after 30 years with the group.
The 200-store Fresh & Easy chain, having absorbed nearly ￡1 billion (US$1.6 billion) in capital since its 2007 launch, remains stubbornly loss-making in the cutthroat US grocery market and Tesco CEO Phil Clarke has been under increasing pressure from investors and analysts to act.
Its third-quarter underlying sales growth eased to 1.8 percent from the second quarter’s 6.9 percent.
The problems in the US compounded a tough trading environment in Britain and central Europe, which was partially offset by the stronger performance in Asia.
Tesco yesterday reported a return to falling quarterly underlying sales in its home market, raising questions over whether its ￡1 billion recovery plan is struggling to gain traction.
The firm, which takes about one in every ￡10 spent in British shops, said sales at UK stores open for more than a year, excluding gasoline and value-added taxes, were down 0.6 percent in the 13 weeks to Nov. 24, its fiscal third quarter.
That compares with analysts’ forecast range of a decline of 0.9 percent to an increase of 0.2 percent. Sales in the fiscal second quarter rose 0.1 percent, its first rise after 18 months of decline.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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