Tesco Says U.S. Stores Start Strong; Protests Grow

Los Angeles, British retailer Tesco announced Tuesday that its U.S stores have started well, even as the chain faced new protests from community groups who fear its marketing promises are not being translated into reality.

Tim Mason, CEO of Tesco's U.S. venture Fresh & Easy, told more than 100 U.S. and European investors that customers have responded well since the chain launched in Los Angeles three weeks ago.

Mason’s comments, released to the media on Tuesday, are the company's first on the progress of the chain since stores opened on Nov. 8 following months of speculation and high expectations from retail industry analysts.

Citigroup has said Fresh & Easy's launch could cause a shake-up of U.S. retail not seen since Wal-Mart Stores, Inc. rolled out its Supercenters in the 1990s. Credit Suisse expects Tesco's U.S. sales to exceed $7 billion by 2013.

Fresh & Easy has opened 13 stores in three markets—Los Angeles, Las Vegas and San Diego—with as many as 200 more expected to open in those cities and in Phoenix by the end of 2008.

The success has not gone without strife. Community groups opposed to the way Britain's largest retailer has gone about launching stores here staged their latest protest late on Monday, picketing the arrival of investors to the three-day store tour. More than 100 demonstrators chanted, waved banners and handed out leaflets reading "Don't be fooled by Fresh & Easy."

The group—The Alliance for Healthy and Responsible Grocery Stores—want Tesco to sign a community agreement focused on labor, social and environmental issues. Tesco has so far resisted negotiations with community or union groups.

However, a Tesco spokesman said Fresh & Easy's workers were free to join a union as it was a constitutional right.