LONDON—As U.K-based retailer Tesco PLC on Tuesday reported a 15.3% rise in net profit for the first half of fiscal year 2010, it sent a strong signal that it plans to push ahead with its struggling effort to crack the elusive U.S. market with its Fresh & Easy chain.
Tesco, the world's third-largest retailer by sales after the U.S.'s Wal-Mart Stores Inc. and France's Carrefour SA, posted a net profit of £1.18 billion ($1.87 billion) for the six months ended Aug. 28. Helped by a strong performance in Korea and China, group sales including value-added tax rose 8.3% to £32.91 billion, and group revenue excluding VAT rose 7.1% to £29.76 billion for the period.
In the process, Tesco delivered a clear sign that it plans to stay the course with Fresh & Easy, which been problematic since its 2007 launch in the Western U.S.—an ill-timed move that found Tesco trying to enter an important market just as the brewing global financial crisis was about to explode. The question of what to do with Fresh & Easy was high on the agenda when Tesco earlier this year named its head of international operations, Phil Clarke, to succeed Chief Executive Terry Leahy next March.
Tesco said it expects its three-year-old U.S. Fresh & Easy chain to become profitable by the 2012-13 fiscal year—the first hard profit target that the retail giant has set for the U.S. since the recession challenged its operations there. The company expects to have 400 stores in the U.S. by then, up from 159 as of Aug. 28.
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