NAPA and VACAVILLE -- The United Kingdom-based parent of Fresh & Easy Neighborhood Market, which has two North Bay stores, today said it is considering options for the struggling startup chain of small-format grocery stores, including selling all or part of the roughly 200-location chain or bringing in a partner to operate it.
Tesco launched Fresh & Easy in 2006 and opened stores in Napa and Vacaville last year. The chain purchased land in Vallejo and secured space in Fairfield for stores. The grocer also had scouted locations in Cotati and Windsor.
Also announced today was the resignation of 30-year company veteran Tim Mason, deputy chief executive officer and chief marketing officer of Tesco PLC and head of El Segundo-based Fresh & Easy.
Tesco said plans to control costs and curtail expansion of Fresh & Easy won't stop the flow of red ink on the 6-year-old U.S. venture quickly enough.
"It is now clear that Fresh & Easy will not deliver acceptable shareholder returns on an appropriate timeframe in its current form," the company said in a statement.
Comparable-store sales for Fresh & Easy are down 2 percent in Tesco's third quarter, interim results for which were released today.
In an October financial update, during which Tesco said it would slow spending on Fresh & Easy, the company said the number of profitable U.S. stores increased from 30 to 55, or 30 percent of the locations, by the of the fiscal second quarter.
Tesco hired Greenhill to review options for Fresh & Easy, including inquiries received to acquire all or parts of the chain. A report on the analysis is planned in conjunction with the release of fiscal-year results in April.