Fresh & Easy Stores May Close, British Parent Tesco Says

The 199 U.S. locations began opening in 2007 but never turned a profit for Tesco

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    NEWSLETTERS

    The British parent company of grocery store chain Fresh & Easy may be getting ready to pull the plug on its nearly 200 stores in California, Arizona and Nevada. Since the mini-supermarket chain's opening in the U.S. five years ago, the stores have yet to be profitable. Jacob Rascon reports from Riverside for the NBC4 News at 5 p.m. on Dec. 5, 2012.

    Five years after British retail giant Tesco opened its first Fresh & Easy market in Southern California, the company said it is reviewing the money-losing venture and may sell or close stores.

    With nearly 200 Fresh & Easy locations in California, Arizona and Nevada, Tesco said it has received approaches from potential buyers. The first store opened in Hemet in Novemeber 2007, followed by several dozen more across Southern California. There are 19 stores in the Bay Area, with locations in San Jose on Bird Avenue,  San Francisco and Walnut Creek

    Tesco Chief Executive Philip Clarke said Wednesday that Fresh & Easy stores will likely be sold off or closed. The chain has its headquarters in El Segundo.

    "It's likely, but not certain, that our presence in America will come to an end," Clarke told the Wall Street Journal. "This is a very major change for the business."

    Tesco said Fresh & Easy Chief Executive Tim Mason will leave after three decades with the company.

    "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 (PDF).

    "Whilst the business has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities," Clarke said in the statement.

    Similar in size to Trader Joe's stores, Fresh & Easy mini-supermarkets are nearly clinical in style, with an emphasis on fresh foods and premade meals, most often using the chain's own label.

    In the very competitive U.S. grocery market, Fresh & Easy's model has been a puzzle to some American consumers, though many have become loyal to it – including several interviewed by NBC4 Wednesday who were upset by the news about the chain's potential fate.

    "It's too bad. It's sad," said shopper Linda Chant outside a Riverside location. "This whole shopping center was built around this – it's a brand new shopping center."

    In its annual report released in April, Tesco said it was "building real momentum in Fresh & Easy." But as one sign of progress, Tesco said it had reduced its U.S. losses for the first time in 2012 — the year when it had once aimed to turn a profit.

    The company announced in January that it would close 12 Fresh & Easy locations in the United States, with about half of the stores in Southern California.

    According to its website, the chain employs about 5,000 workers in the United States, with more than 4,000 of those in California.

    "I'm hoping somebody buys it, so we can stay employed," said Riverside location employee Charles Russell. "A lot of people are going to lose their jobs. ... A lot of people out there can't find jobs right now."

    The company said it would announce progress on potential sales of Fresh & Easy in April.

    The Associated Press contributed to this article.

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