Inside This Issue - News
Tesco eyes exit strategy for failed U.S. venture
May 6th, 2013
LONDON – Tesco PLC’s abandonment of its Fresh & Easy chain in the United States will cost the chain more than $1.8 billion. The total includes $263 million in operating loss and about $1.56 billion in noncash items.
The chain’s confirmation last month of the U.S. exit, which followed rumors that had been circulating for months, was included in Tesco’s fiscal 2012 financial report, which mentioned that Fresh & Easy assets have drawn interest from third parties.
"With profound and rapid change in the way consumers live their lives, our objective is to be the best multichannel retailer for customers," said chief executive officer Philip Clarke. "Our focus now is on disciplined and targeted investment in those markets with significant growth potential and the opportunity to deliver strong returns."
Clarke initiated a reassessment of the retailer’s businesses over a year ago, downsizing overseas operations to focus on lifting business at home.
Fresh & Easy debuted in Southern California in November 2007 and operates 199 stores in that state, Nevada and Arizona. The chain also has a distribution center and kitchen, including produce and meat facilities, near Riverside, Calif.
Tesco also booked a onetime charge of $1.22 billion to write down the value of its real estate in the United Kingdom, reflecting a decision not to develop more than 100 locations that were acquired between five and 10 years ago.
Divesting the sites could take a long time, property experts said, given the soft British economy and growth of e-commerce. The company has more unwanted real estate than rivals J. Sainsbury PLC, Asda Group PLC and Morrisons.