I can see it's going to get through to break even, said Philip Clarke, adding Fresh & Easy was likely to break even periodically in months of 2012 or 2013.
Fresh & Easy has accrued estimated losses of 700 million pounds since its inception in 2007, the report said.
What I am yearning for is a day I can say not just, 'Hey do you know what, it's got to break even' but 'Look here at the prospect of strong returns', Clarke told the FT.
The only reason for having any business is that it generates a return...on investment that justifies you being there. So, first job: break even. Second job: returns, he said.
Clarke has introduced changes at Fresh & Easy since taking over from predecessor Terry Leahy, who set 2013 as the target for when the chain would break even.
Clarke has refurbished stores, opened some smaller Express shops and closed 12 units, the FT said.
Clarke would not be drawn on when he would make a final decision on whether to stay in the U.S. or pursue a sale or joint venture, the report said.
Tesco announced plans at the weekend to employ 20,000 new staff in Britain. The retailer, which runs around 5,400 stores in 14 countries, issued a profit warning in January on the back of poor Christmas trading.
Clarke indicated that Tesco would announce in April fewer store openings in Britain while it tries to improve its UK business.
Tesco is expected to open fewer hypermarkets than in previous years, but Clarke said big stores were not dead and not beached whales, according to the FT.
(Writing by Clare Kane; editing by Carol Bishopric)