CHESHUNT, England — Tesco here said last week Fresh & Easy Neighborhood Market is on track to meet the company's guidance of “sharply reduced losses” this fiscal year and remains “on its way to breaking even” toward the end of its 2012-2013 fiscal year.
The company also said the test of its “friends” loyalty card at seven stores in Bakersfield, Calif., has met “with such success” that a full rollout of the program is scheduled for this week.
In remarks about first-half results, Philip Clarke, chief executive officer, said, “Fresh & Easy has reduced its losses fairly significantly. We said that would happen, and I'm delighted to say that it has.
“It's a big next six months for Fresh & Easy because we begin the store remodeling that has put all the ideas into each store that the [management] team has come up with, and then we add to that the ‘friends’ loyalty card.
“So I think in six months' time it's going to be very interesting to see how much we've been able to drive up the top line and bring down the losses further. So we're feeling confident about Fresh & Easy, but it's a very key six months for them.”
For the six-month period that ended Aug. 27, Tesco said the loss for its 177 Fresh & Easy stores was $113 million (U.S.), compared with a loss of $151 million at 159 stores a year ago. Sales for the half-year totaled $470.5 million — an increase of 23.1% at actual rates, according to Tesco's calculations, or 32% at constant rates.
“This is a promising performance, built around strong, sustained sales growth; substantial improvements to operating ratios in established stores; higher sales densities in new stores; and improving supply chain efficiencies, particularly in our manufacturing facilities,” the company said last week.
“Our clear objective is to accelerate the already strong growth in customer numbers, and this is being met. The first half saw our seventh consecutive quarter of strong like-for-like sales growth” — which Tesco did not specify — “and our two-year increase was 28.4% during the second quarter.
“This continued growth is driving sales per store steadily toward the levels we require.”
Fresh & Easy also said last week it plans to open its first Express store in Los Angeles on Nov. 2 — a 3,000-square-foot format in a densely populated area of the city.