EL SEGUNDO, Calif. -- Renewing speculation that it could pull out of the United States, Tesco Plc said it has cut jobs at the Californian headquarters of its Fresh & Easy Neighborhood Market Inc. chain, reported Reuters. The company insisted the move is not a precursor to exiting the country.
"In April, we said we are taking a more cautious approach to expanding Fresh & Easy, focusing on getting existing stores to profitability," Tesco said in a statement.
"Our central cost base should reflect that more cautious approach. With great regret, this means that we have to make redundancies at Fresh & Easy headquarters in California. This is not with a view to a sale or closure of the business. We remain committed to reach profitability and these changes are about helping to achieve that," the statement added.
A spokesperson for Tesco told the news agency that about 50 jobs would be lost. El Segundo, Calif.-based Fresh & Easy currently employs approximately 5,200 people.
"We are always evaluating the objectives of the business and assessing our progress," Fresh & Easy spokesperson Brendan Wonnacott told CSP Daily News. "Many of our stores are moving into profitability, but since economic conditions continue to be challenging we are taking a more cautious approach to our expansion plans to focus on ensuring our existing stores are profitable. As such, a small number of positions have been made redundant."
In April Tesco Chief Executive Philip Clarke said he did not expect the chain to break even until its 2013/14 financial year, against a previous target of 2012/13.
(See Related Content below for recent CSP Daily News coverage of Fresh & Easy.)
Last month, Clarke said he was committed to the venture but would pull the plug if it continued to disappoint, and rejected renewed calls for an independent review of its strategy.
Some shareholders and other interested parties have called for the retailer to exit the U.S. market. Tesco recently exited the Japanese market.
Fresh & Easy operates about 200 small-format grocery stores in California, Arizona and Nevada.
Fresh & Easy Buzz, an independent blog that tracks the retailer, said Tesco's original plan was to have at least 500 to 600 Fresh & Easy stores operating by now, on the way to 1,000 units in six to seven years from the November 2007 launch.
The majority of the workers laid off were in Fresh & Easy's corporate real-estate department, according to the blog, which it said indicates that new-store development has basically been halted at the chain. Employees involved in Fresh & Easy's new-store support efforts, information technology department and a few other departments were also laid off, the blog added (click here to view the blog's full report).
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