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    Fresh & Easy Plowing Ahead Despite Losses

    Tesco opens 119th small box grocery outlet after announcing $200 million loss in new U.S. division.

    LOS ANGELES -- Fresh & Easy Neighborhood Market, the fledging U.S. division of British supermarket giant Tesco, opened its 119th store yesterday in Corona, Calif., part of the greater Los Angeles market which already had 63 of the new concept stores, according to the Los Angeles Times.

    The opening comes just a day after Tesco reported it lost approxiamtely $200 million on its American venture, which generated sales of about $300 million in the year ended Feb. 28. The company also operates stores in Las Vegas and Phoenix.

    Overall, the international retail giant recorded total revenues of about $87 billion during the just completed fiscal year.

    Tesco executives in London said they plan to stick with Fresh & Easy, albeit at a scaled back expansion pace. They are making no prediction as to when the U.S. invasion might turn a profit.
    "We are in this for the long game," Tesco spokesman Jonathan Church said. "The problem is that we have opened into one of the worst recessions the States has seen."

    Even so, the chain is starting to gain customers, Church said. Sales at stores open at least year are 30 percent above last year, he said.

    When Fresh & Easy first opened, executives said the Trader Joe's-sized stores—heavily dependent on private label goods and prepared foods—would shake up the local supermarket scene. Originally, the stores carried about 3,500 products, barely 10 percent of what's found in a traditional grocery store, according to the Times.

    But after sales failed to meet initial expectations, the company tweaked the format, offering more discounts and promotions, said the report. Fresh & Easy also is adding larger package sizes and more selection in frozen foods and branded grocery items.

    Fresh & Easy will continue to open stores at a pace of about one every two weeks this year, said the LA Times report.

    However, the company has delayed a planned expansion into Northern California despite having announced leases for 38 sites and searching for a second distribution center near San Francisco.

    Fresh & Easy, which opened its first stores in late 2007, Tesco already has a huge distribution center in Riverside, Calif., in the southern part of the state.

    Tesco acknowledged that Fresh & Easy has "high overhead" and not enough stores to offset expenses, according to its financial report.

    Related News:

    -- Tesco Goes Slow and Easy with Fresh & Easy -- April 21, 2009

    -- Fresh & Easy Launches Multi-Buy Discount -- April 17, 2009

    -- Fresh & Easy to Enter Stockton, Calif., Market -- April 15, 2006

    -- Fresh & Easy to Launch 25 New Wines -- March 29, 2009

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