Tesco CEO Philip Clarke has been warned he may need to call an end to the space race in Europe as well as the UK, as he returns to a more hands on global role.

Clarke said yesterday his appointment of new UK managing director Chris Bush, will enable him to spend more time overseeing Tesco’s global empire.

The likely disposal of the company’s seemingly ill-fated US operation, Fresh & Easy, has been widely touted as Clarke’s biggest problem but Investec analyst Dave McCarthy said he had problems closer to home, with like for like sales in Europe down 3.6%  .

“Europe remains a real problem,” warned McCarthy. “Management blames the Eurozone economy, with depressed consumer spending and high unemployment but  we believe Tesco has too many large hypermarkets that have been underperforming for many years. After a 15-year presence, Europe overall has failed to deliver.”

Last year Clarke declared the “end of the space race” in the UK, with an all but a handful of hypers but they have remained a mainstay of Tesco’s Euro operations.

But the boom of online and convenience across other markets is seen by some as just a big a challenge to Tesco’s model as the problems facing the Euro economy.

UBS said Europe “remains a very difficult market” for Tesco, adding the outlook was “persistently tough”.