LONDON — Tesco said Wednesday it has launched a strategic review of Fresh & Easy Neighborhood Market, its U.S.-based chain, and has already been approached with offers.
"In recent months, we have had a number of approaches from parties interested in acquiring either all or part of Fresh & Easy, or in partnering with us to develop the Fresh & Easy business," the company said in a statement.
Tim Mason, the longtime Tesco executive who spearheaded the move into the U.S., has left Tesco effective immediately, the company said.
Tesco operates about 200 Fresh & Easy stores in California, Arizona and Nevada. It began opening Fresh & Easy stores in late 2007 and had originally projected reaching a break-even point by February 2012 — a goal the company pushed forward to February 2013 and, more recently, to the end of the following fiscal year in February 2014.
Read more: Fresh & Easy Future Questioned
For the year that ended last February, Tesco said Fresh & Easy lost $245 million (U.S.), while sales rose 26.3% to $1.02 billion and same-store sales rose 11.9%.
For the first half of the current year through Aug. 25, Tesco said the U.S. loss amounted to $119 million, while sales were up 16.4% to $586.7 million and comps rose 5.2%.
The company said in September that 55 of its U.S. stores were cash-positive, with expectations "an increased number" of stores would turn profitable during the second half. The company also said at the time it planned to constrain capital investments during the second half.
"Whilst the business has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities. I have therefore decided to conduct a strategic review of Fresh & Easy, with all options under consideration," said Phillip Clarke, chief executive officer, Tesco, in a statement.
Tesco said it has retained investment banking firm Greenhill & Co. to assist in the strategic review, and that it expects to provide further updates when it issues its year-end financial report in about three months.
The Financial Times of London suggested that Wal-Mart Stores would be a logical buyer for the stores.
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