Published on: February 27, 2008In the UK, the Evening Standard reports that an analyst at brokerage Piper Jaffray, Mike Dennis, is saying that Tesco’s US Fresh & Easy Neighborhood Markets are generating sales that are short of the company’s targets: “The Fresh & Easy concept is not right and they need to quickly find out what the issues are and reset the concept,” he says.
Dennis suggests that the stores are doing an average of $170,000 a week in sales, and that the company was hoping to do $200,000. “The overall indication seems to be negative,” he says, according to the Evening Standard. “This begs the questions of how bad it could be for Tesco's Fresh & Easy stores across California, Arizona, Nevada and what it would mean to Tesco's long-term growth rates and international strategy in the US.” The paper suggests that it could cost close to $800 million for Tesco to pull out of its US venture.
A Tesco spokesman responded: “This appears to be a bit of scaremongering particularly as Mike Dennis hasn't even spoken to us about Fresh & Easy's performance. It is ridiculous to make judgments just four months after the first store opened. I don't know when Mike last visited California but the up-to-date picture is one of growing sales, increasing customer numbers and more repeat visits.”
- KC's View:
- I repeat – it is way too early to judge Fresh & Easy a success or failure, especially because the next generation of stores undoubtedly will learn much from the first 50. Tesco is smart and wealthy…I’m not sure that quitting, just three months into a venture, is the intelligent thing to do.