LONDON — The future of Tesco's Fresh & Easy Neighborhood Market may be up in the air, according to comments by Philip Clarke, who will become Tesco's chief executive officer in March.
In a story in Sunday's Financial Times of London, Clarke was quoted saying he wants the opportunity to make up his own mind about Fresh & Easy after he sees the U.S. operation "up close and personal. I am not going to be drawn on what is going to happen when I am chief executive because I need the chance to go and look," he explained. "I look at the plans, and the plans are persuasive. But ... there is a big shift required if we are not to get to your doomsday scenario and a billion [pounds] of accumulated losses. Now the plan doesn't say that, so deliver the plan."
The article quoted Terry Leahy, Tesco's current CEO, saying he expects Fresh & Easy to be a success and also that he expects Clarke to continue to expand the chain.
"I don't think he will close Fresh & Easy," the article quoted Leahy as saying. "I think that business is going to be a big success."
The Financial Times article also quoted Colin Smith, the former Tesco executive who headed the research project in 2004 that helped Tesco decide to enter the U.S. market, as saying Leahy had originally envisioned a chain of 10,000 U.S. stores "on every junction, in every major city in the USA," with total volume of 1.25 billion British pounds (approximately $1.6 billion U.S.) over five years.
At the end of Tesco's fiscal year last February, the 145 Fresh & Easy stores in operation had sales of approximately $545 million and a loss of approximately $254 million (165 million British pounds) — a level of loss the company said had probably peaked, though it also said it expected a similar level of loss this year.