Q&A: Tesco chief executive Philip Clarke

How is the UK business performing?

PC: We took the decision in March to get me back on the pitch. We have given it an extraordinary amount of energy. If you look at the other [retailers] you can see they have not had a 1.6% swing in like-for-likes. We have been negative for six quarters and the others have not. This is the start of a very long journey to create a very different Tesco; it’s no longer about opening hypermarkets out of town.

What improvements have you made?

PC: We’ve brought 8,000 more colleagues in, the last ones came in in July. We have only refreshed 10% of our stores in the first half and we have 90% to go. We are only a year out of switching out of going from double Clubcard points to single points, we hired W+K three months ago and have 90 drive through click and collect grocery points which no one else has. We also have 14 marketplace suppliers.

We’ve introduced Delivery Saver which is the first subscription service for home shopping for any mainstream retailer. This is just the start of the journey. I’m not looking back at 20 years ago and the opportunities than are given. It takes a long time to change perceptions of customers who do not already shop with us.

How is Fresh & Easy performing in the US?

PC: We know why we chose to go there initially. The format and the offer is absolutely in tune with the emerging consumer trends in the West Coast. If we can find a way through there’s decades of value for shareholders. We had a stumble in the first half. It’s a sales game at Fresh & Easy, if you can lift the sales you will reduce the losses. I am very clear, Fresh & Easy needs to demonstrate it can be successful. My focus and determination is completely to get that business so that it creates shareholder value.

LM: We had an $18m profit from 150 stores however there are 47 unprofitable stores that have taken that back and almost wiped it out. We will have 55 stores that are profitable and will have 85 profitable stores by the end of the year.

PC: I hope shareholders understand. I respect their patience. The real question for investors is about the UK, so many retailers who have gone global lose their position in their home market.

Is Tesco Direct profitable?

LM: It’s not profitable. It’s only tens of millions away. The range is overmixed towards elecetrical products that has become very commoditised.

Is promotional couponing in the market continuing?

PC: There has been a lot of this above the line couponing. We like the personalised, targeted couponing.

Do you anticipate the laws around restricted opening hours in Korea to be amended?

The Korean Chain Assoication is working hard to try. It’s still a great business, it’s just not going to be generating the profits. We will have to adjust and the market will adapt.

Are you now moving to a smaller store model throughout your markets?

PC: Largely we have laid down the hypermarket network in most markets. We are working to grab the strategic opportunity of the internet.