After ploughing more than £250m and eight years into trying to crack one of the toughest retail markets in the world, Tesco has admitted defeat and announced that it is pulling out of Japan. The move is a rare admission of defeat by the British supermarket group and raised speculation it could be prepared to exit its much larger loss-making business in the United States if its current recovery plan fails to deliver.
As Reuters reports, Japan is the smallest of Tesco's 13 international businesses, consisting of 129 stores in greater Tokyo employing just over 3,900 people and making less than 500 million pounds ($813.8 million) in annual sales, according to analysts' estimates. Analysts had long tipped the business for disposal after it failed to make significant inroads into a market dominated by general merchandise operators such as Seven & I Holdings and Aeon .
But Philip Clarke, the chief executive of Tesco, tried to quash any speculation that the grocer may also seek to pull the plug on its Fresh & Easy chain in the US, which suffered losses of £186m in the year to 26 February. Tesco – which has operations in 14 countries, including Japan and the UK – has vowed to make Fresh & Easy profitable by the end of 2012-13. Mr Clarke said yesterday: "We've got great opportunities in Asia in businesses where we are market-leading and I think any comparison with Fresh & Easy would be inappropriate."
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