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Tesco’s Chief Executive Comments On US Venture

Jim Prevor’s Perishable Pundit, May 10, 2007

With all the industry getting ready for Tesco to Come to America, it is worth paying attention to what Sir Terry Leahy, Chief Executive for Tesco, has to say.

He did a video commentary after Tesco announced its preliminary results last month. You can watch the video here.

Sir Terry made a few comments specifically about its U.S. venture:

Q. And all this investment in International, that’s going to be dwarfed isn’t it by the investments in the US. Are you confident that this will pay off?

A. I don’t think the US investment will dwarf investment internationally. The majority of our capital investment will continue to go into the countries we’re already in but we’re very excited about our plans for the US and, as I say, we will launch this year, we intend that we’ll grow as rapidly as we can in the US, and, if we’re right and the thing is as successful as we expect it to be, then we have the potential to develop, in Tesco terms, a very substantial business in the United States.

Q. When you say as rapidly as you can, might there be delays in the United States?

A. Well, there are always delays everywhere but the United States ought to be one of the better places for planned growth: planning zoning is relatively open.

That is the big win for Tesco in America — it is a large, modern market in which one can actually get real estate and open stores. In much of the world, this is impossible. You either have to pay off corrupt politicians for zoning cooperation or the rules are strict and you can’t get around them at all. In some countries property is traded back and forth between either a few select families or politically favored groups.

In the U.S., the key is really whether or not you have a business, and Sir Terry alludes to this with the billion-dollar question: “…if we’re right and the thing is as successful as we expect it to be, then we have the potential to develop, in Tesco terms, a very substantial business in the United States.” Which means that the potential is there but they still have to have a concept that works.

You can find a transcript to the video here and a slideshow on Tesco’s preliminary results right here.

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