LONDON – Retailer Tesco PLC plans to exit the U.S. market and sell its Fresh & Easy retail chain. The company issued the news while reporting its preliminary earnings for fiscal year 2013.
“Based on our progress so far with our strategic review of Fresh & Easy, including the indications of interest received from third parties, we have confirmed that the outcome of the review will be an exit from the United States,” the company said in a statement.
In its earnings statement Tesco reported its U.S. results as discontinued operations and said the total impact to profit after taxes would be £1.2 billion ($1.83 billion), including £169 million in trading losses and £1 billion in non-cash items related to impairment of fixed assets and lease provisions.
In December 2012, Tesco said it was conducting a strategic review of the Fresh & Easy format, because the chain was not delivering an acceptable shareholder return. In October, Tesco also said it would limit new capital investment in the chain on reducing costs and improving the profitability of existing stores.
Tesco launched the Fresh & Easy concept in 2007. The company’s goal was to introduce a retail format in the U.S. that was smaller, easier to navigate than the stores of larger retailers and able to deliver fresh foods to consumers at an affordable price. The company currently operates 200 stores in Arizona, California and Nevada.
For the 52 weeks ended Feb. 23, Tesco had a trading profit of £3,453 million, a 13% decline when compared to the same period of the previous year when the retailer recorded a trading profit of £3,969 million. Sales for the year were £72,363 million, a 1% increase compared to the previous year when the retailer had sales of £71,402 million.