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British grocer Tesco urged to ditch Fresh & Easy

Stephen Beard Apr 9, 2012

David Brancaccio: They are these tidy, medium-sized grocery stores in places like Arizona, Nevada and California. But Britain’s biggest grocery chain has now been told to ditch its Fresh & Easy stores in the U.S.

From London, Marketplace’s Stephen Beard reports.

Stephen Beard: With around a third of Britain’s supermarket business, Tesco has hit the ceiling here, and so it has looked for growth abroad in the U.S. and elsewhere. Over the past five years, it launched more than a 180 supermarkets in California, Nevada and Arizona. The ultimate goal was a national chain under the banner Fresh & Easy.

But the venture has proved anything but. Earnings shriveled like an old lettuce. Competition stiffened. Losses have topped more than a billion dollars. Two of Tesco’s biggest investors have now called on the company to pull out of the U.S.

Fundmanager Justin Urquhart Stewart says Tesco should never have crossed the pond.

Justin Urquhart Stewart: I can’t remember one British grocery or supermarket firm that’s succeeded in the United States. Frankly in that style of business, we’ve never done terribly well ever since they started throwing our tea in the harbor.

Tesco is now under pressure to come home and focus all its energies on the U.K. business, which is profitable but flagging.

In London, I’m Stephen Beard for Marketplace.

Brancaccio: Also in grocery news, ever wonder how they make money off those bags of ice you can buy on the way out of the supermarket? They may not be making money. The Wall Street Journey reports that Reddy Ice is “ready” to file for Chapter 11 bankruptcy protection. There’s talk it might some day merge with Arctic Glacier, a Canadian rival that also sought protection from creditors.

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