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Report: Tesco Puts Brakes on U.S. Rollout

3/31/2008

London Tesco has halted the rollout of its Fresh & Easy chain in the United States amid growing analyst speculation that the five-month-old venture has begun to miss internal sales targets by some margin, according to a report in The Guardian.

Fresh & Easy marketing director Simon Uwins revealed on the company's Web site, where he writes an occasional blog, that there would be “a three month break from openings simply to allow the business we've created to settle down."

"In a little over four months we've gone from a business with no stores to one with 59—with hundreds more in the pipeline ... so we've given ourselves a little bit of time to kick the tyres, smooth out any wrinkles, and make some improvements that customers have asked for," Uwins wrote.

This month analysts at Goldman Sachs and U.S. brokerage firm Piper Jaffray downgraded their forecasts for Tesco over concerns about Fresh & Easy.

Mike Dennis of Piper Jaffray said "very weak footfall" had become an issue for the new chain, adding that supplier feedback suggested the sales could be as little as $30 million, against the anticipated $100 million.

Tesco recently appointed Jeff Adams, an American running Tesco's operation in Thailand, as chief executive Tim Mason's deputy in a move some are suggesting is evidence that Fresh & Easy is falling short of expectations, according to the report.

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