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LONDON - Thanks to Berkshire Hathaway's Warren Buffet, British retail giant Tesco has even more capital with which to launch its U.S. invasion, as the retailer's shares rose 2.1 percent in early Friday trade on news that billionaire investor Warren Buffett has a 2.9 percent stake in the company.
According to Buffett's annual letter to shareholders, released last week, his insurance and investment company Berkshire Hathaway Inc. owned more than 229 million shares of Tesco at the end of 2006, with a market value of $1.82 billion.
Observers said Buffett's holdings in the retailer stands as a vote of confidence in Tesco's plans for expansion into the U.S.
Morgan Stanley's Nick Coulter also added to the boost in Tesco share price, when he raised his price target on the retailer to 490 pence per share from 380 pence on the prediction of a successful U.S. venture.
Tesco plans to open its Fresh & Easy Neighborhood Market stores in Phoenix, Las Vegas, Los Angeles, and San Diego this fall.
In other Tesco news, the retailer last week won the Retail Week Customer Service Initiative of the Year award for its successful "one-in-front" campaign, which uses Smartlane line-busting camera technology, developed by IRISYS to reduce waiting times for shoppers at the checkout.
The IRISYS cameras use thermal imaging technology to measure and predict customers' arrival at checkouts, enabling managers to react in real-time to ensure the right number of checkouts are open.
Tesco chief executive Sir Terry Leahy credited the thermal imaging cameras as being a key factor in the company's half-year pre-tax profits rising 10 per cent to GBP1.092 billion.
"We have heat seeking cameras that sense the number of customers entering a store and predict the checkouts that need to be open in an hour," Leahy said in a recent earnings call. "We can monitor and manage the service customers get much more precisely - by customer, by store and by the minute. Thanks to this, a quarter of a million more customers every week don't have to queue."
The Smartlane solution uses ceiling mounted infra-red sensors above the checkout lanes to detect the number and behavior of customer groups at the checkouts. The intelligent sensors automatically calculate the average line length, average wait time and overall store performance against Tesco's One in Front customer service commitment, which states that, "if there was more than one customer in front, they would open another check-out." Displaying real-time queuing data on the shop floor enables the retailer's management team to deploy their multi-skilled staff to react quickly to potential line issues.
Tesco operates more than 2,800 stores across 12 countries, and employs more than 370,000 associates.