Bold and free-spending under its previous CEO, Sir Terry Leahy, between 1997 and 2011, Tesco was at the forefront of the retail race in the UK where the main players spent heavily on new stores across Britain's high streets and into its suburban areas. The strategy was largely successful, and this success in the UK was the springboard from which Tesco was able to develop a strong presence internationally.
Between 2002 and 2012, net income increased from GBP800mn to GBP2.8bn according to the Financial Times . Over this same period the proportional contribution of the UK to yearly revenues dropped from about 85% to 65%, which was fundamentally a good thing as companies such as Tesco and Walmart looked for greater growth abroad, particularly in emerging markets where retail was often an open field. Where in 2009-2010 Tesco spent about 7-8% of its annual sales on capital expenditure ( which at the time was a lot more than many of its rivals ) , under incumbent CEO Phillip Clarke that proportion has had to be reigned in and has come down to about 5% in the year to February 2012. The focus at the moment is on reviving the UK business with a GBP1bn revamp plan underway.
Tes co has been under pressure from shareholders to address structural shortcomings that were exposed by the landmark profit warning it announced in January 2012. This was the moment it became clear that the retailer had to focus a lot more attention on its business at home , and in having to do so the inevitable fall guy would be parts of the international business , with the failed US Fresh & Easy business the obvious target of disgruntlement from investors.
Resurrecting its UK business and ultimately clawing back some of the market share that it has ceded over to rivals in the ultra - competitive UK retailing landscape is going to take longer than some observers might have hoped. According to Kantar Woldpanel , Tesco was the slowest growing major UK food retailer over the four week period to September 16 2013 , and according to Barclays , Tesco has ceded market share for five consecutive periods.
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