Tesco UK sales drop and US boss departs in Fresh & Easy review Tesco's UK sales for the three months to the end of November dropped 0.6%. Photograph: Paul Ellis/AFP/Getty Images Tesco's crown as the UK's most successful retailer has slipped further as the company called time on its loss-making US business and unveiled dismal sales figures in the UK and other countries for the last three months. The failure of the US operation, after investment of more than £1bn, also cost the retailer's deputy chief executive, Tim Mason (below), his job. Mason, who masterminded the US business from the opening of the first Fresh & Easy store near Los Angeles five years ago, had spent 30 years with the grocer and is expected to walk away with a total payoff of about £5.7m. Tesco chief executive Philip Clarke has called in investment bankers to advise on what to do with the Fresh & Easy chain, which has 200 stores. However, he admitted Tesco was most likely to "exit" the business, which it had once hoped to build into a huge chain that could take on Walmart. Clarke also had bad news from the UK. Sales at Tesco's 3,000 UK outlets over the three months to the end of November dropped 0.6%, with non-food sales - mainly fashion and homeware - described as "not good enough." By comparison, its rival Sainsbury's recently reported a 1.7% increase and has been gaining market share. Tesco's performance in Europe has been hit by the continuing eurozone crisis and sales in Asia are also in decline. Poland, Slovakia and the Czech Republic were particularly badly affected, Clarke said. Tesco has had a bad 2012. In January Clarke had to unveil the grocer's first profits warning in 20 years. He is now battling to restore the grocer's once formidable reputation, pouring £1bn into the core UK business to improve service, update the stores and regain the supermarket's reputation for being unbeatable on price. The decision to quit the US gave the company's shares a boost, however, and they closed up 3.3% at 336.7p as investors cheered the fact that there was now an end in sight to the losses the Fresh & Easy venture has racked up. Mason, a former marketing man who had been with Tesco for 30 years and, with the former boss Sir Terry Leahy dreamed up the Every Little Helps slogan, leaves with immediate effect. The 55-year-old also has a £9m pension pot and could start drawing his £477,000-a-year pension straight away. He also separately owns £6.6m of shares, having sold 2m shares over the past 18 months. Clarke thanked Mason for his work but said he had to make the "tough calls at the right time." He added: "Having assessed its long-term potential, we've concluded that Fresh & Easy is not going to achieve the scale and profitability it needs in a reasonable timescale." The final straw is thought to have been an abrupt dip in Fresh & Easy's recent sales. Growth of nearly 7% in the second quarter of this year plunged to less than 2% in the most recent three months. Mason came under fire from shareholders last year, with several criticising a £4.3m payout he received despite the US failing to turn a profit and never getting a serious foothold in the market. It led to nearly half of all shareholders failing to back Tesco's remuneration report at the 2011 annual meeting, and forced the company to overhaul its pay policy for top executives. When Fresh & Easy was launched Tesco hoped it would break even within two years. It planned 1,000 stores on the west coast and had long-term plans to move to the east coast too, but the plan soon went off the rails. The sub-prime crisis and subsequent downturn hit hard in California, and in Nevada and Arizona - where Mason had also opened branches. The timescale for breaking even was pushed back continuously, most recently to 2014. Last year it made a £153m loss on sales of £638m. In August there was no sign of any improvement when Tesco admitted Fresh & Easy had run up a £74m loss in the first six months of this year. When Leahy retired last year, all eyes were on Clarke to see whether he could take the axe to Fresh & Easy, a venture shareholders had blamed for an underwhelming share price. As marketing director, Mason was behind the development of Tesco Clubcard and Tesco.com. For the US gamble Mason relocated to the US with his wife, Fiona, daughter of the former Tesco chairman Lord MacLaurin, and three of his seven children. She took up golf while he attempted to get to grips with the task of building an empire in California, Nevada and Arizona, hoping to one day expand to the east coast. With Clarke in control, the company appears keen to refocus attention on the UK business, especially following the first profits warning in nearly two decades. Philip Dorgan, analyst at Panmure Gordon, said: "This hardly represents Tesco's finest hour, but it is more about what it says about likely changes in management's thinking." Clive Black, a retail analyst at Shore Capital, called the US review "one of the most high-profile and perhaps defining moments in Philip Clarke's position as CEO of the group, noting as we do that Fresh & Easy was not his baby."