Tesco faces City call for US rethink

Tesco was today facing fresh investor scrutiny after a top shareholder said quitting the United States would help the retail giant get its UK operation back on track.

The comments from Richard Black at Legal & General Investment Management, which is Tesco’s third biggest shareholder with a 4 per cent stake, come days before chief executive Phil Clarke unveils his blueprint for reviving the chain.

As well as an exit from the loss-making American operation Fresh & Easy, Black has suggested Tesco ditches banking in order to concentrate on the core grocery side of the business in the UK.

He said in a Sunday newspaper: “Strategically, the business needs to think about its capital allocation and return on capital.

“It needs to think long and hard about what it wants to be - can it be everything to everyone, or should it focus on its gem, the British grocery business? Of course, this is likely to raise questions about other areas of the business, such as America and the bank.”

Tesco’s shares are down 21 per cent this year, compared with 2.2 per cent at Sainsbury’s, after a first profits warning in two decades in January.