Tesco said it was considering different options for the business and that it received several approaches to buy all or parts of Fresh Easy over the recent months. It might also partner with other companies, Tesco said. Tim Mason, Fresh Easy’s chief executive, would leave Tesco, the company added.

Aldi Group, the German discount supermarket chain, could be among those interested in acquiring the business, some analysts said.

“It is now clear that Fresh Easy will not deliver acceptable shareholder returns on an appropriate timeframe in its current form,” Tesco said.

Tesco turned its focus on its home market earlier this year with a $1.6 billion investment program to reverse a drop in profit in Britain and amid criticism about an expansion abroad, including into the United States, that failed to pay off.

Tesco started its Fresh Easy brand about five years ago, hoping to have discovered a market niche of running smaller stores that offer warm meals, but only a few stores actually made a profit. Earlier this year, Tesco said it would slow down new store openings in the United States and remodel the existing stores, with in-store bakeries and stands selling fresh flowers.

But analysts have repeatedly warned that the U.S. business would struggle to make a profit amid fierce competition and a difficult economic environment.

“Whilst the business has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities,” Philip Clarke, Tesco’s chief executive, said in a statement. “I have therefore decided to conduct a strategic review of Fresh Easy, with all options under consideration.”

Tesco said it hired the advisory firm Greenhill to help review its options. It expects to give an update on its plan for Fresh Easy in April.

Article source: http://www.nytimes.com/2012/12/06/business/global/06iht-tesco06.html?partner=rss&emc=rss