We've been reporting exclusively all year that the end of Tesco's Fresh & Easy Neighborhood Market - 199 stores in California, Nevada and Arizona - is near.
Now, according to our sources, the near is here: Tomorrow Tesco could announce that it's either selling or will pull the plug and close its five-year-old U.S. fresh food and grocery chain, which has racked up loses of nearly $2 billion.
If Tesco doesn't announce either of these two moves tomorrow when it reports its holiday season trading numbers to date - and based on our reporting we haven't been able to confirm there is a buyer for Fresh & Easy - it will announce it's launching a "formal review" of Fresh & Easy Neighborhood Market, which is merely a way to buy some time in order to further search for a buyer.
As we've reported previously, Tesco has been formally reviewing Fresh & Easy since earlier this year when Tesco CEO Philip Clarke brought in former Asia operations CEO Jeff Ashdown to essentially take over day-to-day operations of the Southern California-based grocery chain.
Tesco's CEO and its board know the status of the chain (if not Tesco investors are in real trouble) - another $100 million dollar-plus loss for the current fiscal year which ends February 2013 is on the way, for example - which is why an announcement of a "formal review" would merely be a stall tactic.
Tesco reported a $250 million loss for Fresh & Easy for its most recently-ended fiscal year. We expect the loss for this fiscal year, which ends February 2013, to be slightly but not much less than that because of the massive layoffs, some cost-cutting, and the halt on new store openings at Fresh & Easy since August of this year.
Further evidence that the end is here: There are numerous Fresh & Easy stores completed and previously slated to have been opened in the third and fourth quarters of this year, like the units in Los Angeles and Sunnyvale, California which a construction firm contracted to Fresh & Easy handed over to the chain a couple months ago, that haven't been opened. The two locations are at the top of what is a list (planned new store roll out) of stores Fresh & Easy has wanted to open but hasn't been allowed to by parent Tesco.
Nobody needs a formal review to know that when a grocer doesn't open stores it's spent millions of dollars to have built, its CEO, in this case Tesco CEO Philip Clarke, doesn't see a future for the operation. Translation: The end of Fresh & Easy is here regardless of what Tesco says tomorrow morning about its U.S. operation.
As we've reported exclusively, Tesco has been trying to sell Fresh & Easy for some time. Among the potentials we've reported on are Aldi and Dollar General.
Additionally, we've also reported there's been "feelers" out to various commercial retail real estate agents for some time, the goal of which has been to "dispose" of Fresh & Easy, either as a whole chain or in bits and pieces. Tesco has also, as we've reported, been trying without success to either sell or sublease a number of the numerous store locations it has but has never opened.
At present we can't conclusively report a sale of Fresh & Easy, or that if a deal to sell the chain hasn't been inked that Tesco will pull the plug and close its Southern California-based food and grocery retailing operation.
But we can report the end of Fresh & Easy is here. And it's here regardless of when or the form in which Tesco disposes of it.
Stay tuned though, as we continue to work the story.
Note: Read through the tweets from all of 2012 at www.twitter.com/freshneasybuzz (as well as the blog) for a natural progression of our reportage about the end of Tesco's Fresh & Easy being "near" to its end being "here."
Breaking...More to come...
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