Tesco arrived in the U.S. in 2007 amid great fanfare with its first Fresh & Easy stores. Now, just five years later, the 30 year Tesco veteran in charge of the 200 unit operation is gone and the company is looking to unload the stores.
Tesco this week announced that Fresh & Easy CEO Tim Mason was leaving the company as part of a process billed as a "strategic review," that sounded more like an outright sale of the unprofitable operation. The move was somewhat telegraphed in October when Tesco announced that new capital investment in Fresh & Easy would be tightly constrained while the business focused on reducing costs and improving the profitability of existing stores. However, after only two months the company said it had become clear that Fresh & Easy would not deliver acceptable shareholder returns on an appropriate timeframe in its current form.
"I have been clear since my appointment as CEO was announced that my role is to deliver long-term value for shareholders," said Tesco CEO Philip Clarke. "Following a year in which my priority for Fresh & Easy was to improve its performance, I have now made a fully-informed assessment of its longer term potential. (While) the business has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities. I have therefore decided to conduct a strategic review of Fresh & Easy, with all options under consideration."
The company said it already has had approaches from a number of parties interested in acquiring either all or part of Fresh & Easy, or in partnering with Tesco to develop the Fresh & Easy business. Progress on those efforts won’t be announced until full year financial results are announced next April.
If Tesco should ultimately divest itself of the U.S food retailing division it will be a far cry from the scenario envisioned by some when Tesco announced in 2006 that it planned to enter the U.S. market. A the time, the economy was roaring and the prospect of one of the world’s leading food retailers was thought to spell trouble for grocers in the West coast markets Tesco planned to target initially.