Tesco to cut losses on US venture

Supermarket giant Tesco will cut its losses on its £1 billion foray into the United States when it reveals annual results on Wednesday.

The UK’s biggest supermarket is expected to confirm a decision to quit the US – the world’s most competitive retail market – where its 199-store Fresh Easy business has never made a profit.

Tesco’s bid to take on Wal-Mart in its own back yard was doomed in December when chief executive Philip Clarke said he was not afraid to make “big decisions” by calling time on the venture.

Analysts expect heavy writedowns if Tesco quits the US, with predictions ranging from £250 million to £1 billion. Options for the US business include a one-off sale or piecemeal disposal of assets.

Department store chain Debenhams will reveal the full impact of January’s snowstorms in half-year results on Thursday after it warned over profits last month following a weather-hit start to the year.

The group saw underlying sales slump 10% between January 14 and 27, compared with a 5% rise over Christmas and New Year. It held promotional events during February in a bid to recover the lost sales, but said the impact on margins meant profits for the six months to March 2 would be around £120 million, against £128.5 million a year earlier and City forecasts in the region of £131 million.

The group’s hopes for a rebound through its spring and summer ranges may also have been dashed by last month’s unseasonably chilly weather, which has hit many clothing retailers. But Debenhams has been surprisingly resilient aside from the snow impact, enjoying record December trading despite intense competition. As a result, like-for-like sales still grew by 3% for the first 26 weeks of the financial period, even when including the snow disruption.

Meanwhile, Bookmaker William Hill’s fast-growing online division looks set to be the star performer again when it reports on first-quarter trading. Increasing numbers of punters are betting via its mobile apps, and William Hill recently backed its flourishing online arm by spending £424 million on taking full control of the operation.

The swoop on the 29% stake held by gaming software partner Playtech came as it posted a 22% rise in pre-tax profits to £292.7 million for 2012, driven by a third year of online revenues growth above 20%.

Article source: http://www.expressandstar.com/business/city-news/2013/04/12/tesco-to-cut-losses-on-us-venture/

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