Tesco entered the U.S. market five years ago with confidence it had devised the right formula of fresh prepared foods, convenience and specialty offerings in a small-format store.
Now, 200 stores later, the world’s third-largest retailer based in the U.K. is shuttering or plans to sell all stores in the U.S. market, all of which are in California, Nevada and Arizona.
Tesco invested as much as $1.6 billion in its Fresh & Easy operations with only a few stores having reached break-even or profit, the company reported.
While Fresh & Easy was never able to cut muster financially enough to satisfy shareholders and top-level executives, the company earned numerous accolades and awards for its modestly priced private-label wines and specialty foods.
Under pressure from shareholders for the past year to bring Fresh & Easy to profitability or cut the losses, Tesco has been exploring alternative options for the business. During that time, several parties approached Tesco, interested in buying part or all of the business, which includes several commissary distribution centers, according to a New York Times report. Fresh & Easy’s CEO Tim Mason plans to leave Tesco after more than 30 years of tenure with the company.
“It is now clear that Fresh & Easy will not deliver acceptable shareholder returns on an appropriate time frame in its current form,” said Tesco CEO Philip Clarke during a recent quarterly conference call with analysts.
Retail analysts predict that Aldi, a German discount supermarket chain that owns Trader Joe’s and Aldi stores in the U.S., and Wal-Mart are likely bidders for the business.
Tesco said it has retained advisory firm Greenhill to help review options for Fresh & Easy, and will provide an updated plan for the U.S. stores in April.
