Tesco's board of directors should reassess the strategy of company's U.S. Fresh & Easy division, which has cost company £1.94B over five years and is not profitable, says group that works with union pension funds

Cindy Allen

LONDON , June 15, 2012 (press release) – Information Concerning the Proponents
The CtW Investment Group works with pensions and benefit funds sponsored by unions affiliated with Change to Win, a coalition of U.S. unions, to enhance long-term shareholder value through active ownership. These funds collectively hold over $200 billion in assets, or £129 billion, and are substantial long-term Tesco shareholders.

Introduction

This briefing sets out the evidence in support of three amendments to the accounts and reports of directors and auditors which will be presented at the Annual General Meeting of Tesco PLC to be held at 11.00 a.m. on 29 June 2012.

We are circulating this briefing to certain fellow shareholders of Tesco because we believe that continued losses and serious operational challenges in the company’s Fresh & Easy United States business require the Board of Directors to reassess the strategy for this division. In its nearly five years of operations, Fresh & Easy has a deeply troubling track record including:

· Repeated shifts in strategy and revised benchmarks, leaving investors unable in our view to predict future performance;
· Total investment and losses of £1.94 billion from Fresh & Easy operations;
· Inadequate disclosure of the costs associated with the US operations, further frustrating investors who seek to understand this risky venture.
We believe an evaluation of Fresh & Easy by the Board is urgently needed to protect shareholder value and ensure the United States business does not weigh on Tesco’s results
during a crucial period of the company’s United Kingdom-focused turnaround program.

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