EL SEGUNDO, Calif. -- Fresh & Easy Neighborhood Stores Inc., Tesco Plc's chain of U.S. small-format grocery stores is likely to reach a breakeven point as early as this year, Tesco CEO Philip Clarke said in an interview with the Financial Times. But Clarke warned that simply stemming losses would not be enough to guarantee the future of Fresh & Easy, which has struggled to make inroads into the American grocery market.
Clarke said the U.S. unit, which is estimated to have racked up 700 million British pounds ($1.1 billion U.S.) of losses and sucked in one billion British pounds ($1.57 billion U.S.) of capital since its inception in 2007, was likely to break even periodically "in months of 2012 or 2013."
But there remained a question mark over whether the U.S. business could make meaningful profits, he said.
"Not losing money is a good thing, but, on the other hand, generating strong returns from the business would be a great moment, and that is where we are starting to focus our efforts now, because that is the next great question," Clarke told the newspaper. "The only reason for having any business is that it generates a return ... on investment that justifies you being there. So, first job: break even. Second job: returns."
Clarke has driven a number of changes at Fresh & Easy--refurbishing stores, opening a handful of smaller "Fresh & Easy Express" stores (click here for previous CSP Daily News coverage), but also closing 12 locations (click here for previous coverage).
He would not say when he would make the final decision on whether to stay in the United States or pursue a sale or joint venture, said the report.
El Segundo, Calif.-based Fresh & Easy, the U.S. operating unit of London-based Tesco, has approximately 180 small-format grocery stores in California, Arizona and Nevada.
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