Tesco’s U.S. Retailer “Fresh & Easy” Regroups After Tough YearApril 25, 2011
Fresh & Easy, the U.S. retail brand owned by U.K. supermarket group Tesco PLC, lost $300 million in its fiscal year ended February 26th. The loss came despite a 38.1% jump in sales during the year. Tesco attributed the performance to a struggling economy that forced 13 of its more than 160 stores to close in October 2010, in addition to its acquisition of two fresh food suppliers, 2 Sisters and Wild Rocket Foods.
Fresh & Easy, which operates in California, Nevada and Arizona, was launched to great fanfare in November 2007, with Tesco committing to a $2 billion investment over a five-year period. Initial projections called for expansion to 1,000 units. The stores are small-format specialty units featuring standard grocery items and prepared foods. In beverage alcohol, Fresh & Easy’s focus is on proprietary wines and beers priced below national brands, and aiming to be equal or better in quality.
Despite Fresh & Easy’s problems, Tesco said it remains committed to its U.S. business. The company said like-for-like sales were up 10% in the fiscal fourth quarter and that it expects significantly reduced losses in fiscal 2011-2012, with plans to expand by 50 more units. Tesco added that Fresh & Easy remains on track to break even toward the end of fiscal 2012-2013, when the chain expects to have a total of 300 stores (down from a previous projection of roughly 400 stores). Key to the strategy will be an effort to target more mainstream U.S. consumers, Tesco said.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.