retail news in context, analysis with attitude

Bloomberg reports that if Tesco were to close its Fresh & Easy Neighborhood Market chain, which operates stores in California, Arizona and Nevada, it would cost it the equivalent of about $382 million (US) in cash, and force the company to take a writedown on its results that would be in the neighborhood of $1.5 billion (US).

The numbers are compliments of the analysts are Shore Capital.

The story also notes that Tesco CEO Philip Clarke is engaged in a review of all the company's options for Fresh & Easy, and that the speculation currently is focused on a likely closure of the chain and then a sell-off of its assets to various operators, with Walmart and Aldi among the chains most prominently mentioned.

According to Bloomberg, "Tesco has invested about 1 billion pounds in the U.S. since creating the business in 2007, targeting the West Coast with a series of neighborhood urban stores in a market dominated by big-box supermarkets. Fresh & Easy distinguishes itself with a focus on budget-priced, healthy food and a predominance of own- brand items. Getting the business to produce an acceptable return would take too long, Clarke said in December."
KC's View:
A billion here, a billion there ... and pretty soon you're talking about real money.

I remain gobsmacked that Tesco was not able to figure the US out, that it got the market so completely wrong, and was unable to adjust when things did not seem to be going right.