So this morning the inevitable news that we have been waiting for for a long time…  Tesco is to launch a strategic review of their American ‘Fresh & Easy’ chain.  Let’s be clear, you don’t launch a strategic review to then carry on as normal; sale or closure will result.  And about time too I would say…  I have long been clear that their investment into America was ill conceived almost to the point of a dereliction of the senior managements duty to maximise shareholder value (that is their primary goal after all).

Tesco’s have invested some £1bn in developing the chain in a country that already has the most sophisticated retail sector in the world with the greatest degree of market saturation and very limited growth opportunities.  They would have done far better to invest this cash into developing markets that hold fewer competitors and greater growth opportunities –  what about Vietnam, Cambodia, further investment into India & China etc. etc.   Their withdrawal was inevitable to me from the very first day they arrived – & you’ll be thinking ‘it’s easy to say that now’, but if you read my posts on here from 8th May 2001, 9th June 2011, 31st August 2011 & 20th Feb 2012 you’ll see that I have, along with many market commentators, been consistently of this view.

The markets have responded positively to the news, Tesco’s share price has risen by 2.8% today so far representing a £673m rise in company value – clear investors like the move.  We’ll be here again though, corporate arrogance will lead to other bid strategic errors that will appear obvious to the outsider but senior management will be blinded by their egos.