Tesco to exit U.S., take $1.5 billion loss on Fresh & Easy chain
Publish Date: April 17, 2013
U.K.-based retail conglomerate Tesco has announced plans to withdraw from the U.S. and take a $1.5 billion loss on its 199-store Fresh & Easy grocery chain, which failed to gain traction with consumers in seven years of operation.
The company is still seeking a buyer for all or parts of the chain, and hopes to complete the process within three months, Tesco Chief executive Philip Clarke said at a press conference. When the first Fresh & Easy location opened in Phoenix in 2007, the chain was touted as a smaller, more convenient alternative to the traditional U.S. supermarkets. Fresh & Easy units offered fresh food and ready-to-eat meals at low prices in stores measuring 10,000 to 15,000 square feet. Since then, Tesco has invested about $1.6 billion to expand the chain, despite competition from the likes of Walmart and Whole Foods.
“When I became CEO I really did give it all that we had but in the end I’m responsible to investors and I know I can deliver more to them by leaving that I can by staying,” Clarke said. “What we’re most interested in is those buyers that are interested in buying the complete business.” Clarke said selling the operations to one buyer would help Tesco make a clean break and avoid cumbersome leasehold issues.
Tesco is also retrenching in its home market. Clarke said Tesco will cancel plans for about 100 U.K. stores and take a $1.5 billion loss on the value of the sites it had acquired for those stores.