History
On February 9, 2006, Tesco announced that it planned to move into the United States by opening a chain of small format grocery stores in three Western states (Arizona, California and Nevada) in 2007 named Fresh & Easy.[9] The initial planned capital expenditure was up to £250m ($436m) per year. After Tesco CEO Terry Leahy announced serious resources had been committed to developing a format that would be popular with American consumers, investors responded with some skepticism with a small drop in the company's share price.[10] The markets were expected to be around 1400 m2—good-sized supermarkets in many countries, but about one-third the size of an average supermarket in the US[11] By January 2007, Tesco opened its U.S. headquarters in El Segundo, California.[12] The company initially expanded into Southern California, Phoenix, Arizona, and Las Vegas, Nevada.[13]
On April 21, 2009, Tesco reported a trading loss of £142m from Fresh & Easy. On October 4, 2010 Fresh & Easy announced that it was temporarily closing 13 stores because of shrinking populations, high percentage of housing foreclosures and high unemployment rates. The stores were being mothballed, with hope of reopening them when the economy improved. Six of the stores were in the Las Vegas area, six in the Phoenix area and one in Moreno Valley, California. Most of the closures were "C-level stores", doing less than $50,000 USD in weekly sales.[14][15] The business was not expected to break even until 2012–13.[16] In the Strategic Review announcement in December 2012, research was showing that the company was not going to make a profit until the end of 2013 or even 2014. An article in the Los Angeles Times estimated that the chain had experienced "about $1.2 billion in cumulative annual losses" prior to 2013.[17]
In February 2013 it was reported that despite rumors, Tesco would not sell or close the chain.[18] This "rumor" was based on the fact that Tesco Chief Executive Philip Clarke announced to shareholders that Tesco would close or sell Fresh & Easy.[19]
Tesco announced the sale of the chain on September 10, 2013, to Yucaipa Companies LLC.[20] In fact, Tesco was not so much selling the chain as "essentially paying Mr. Burkle’s Yucaipa Cos. to take on [Fresh & Easy's] liabilities" at a cost to Tesco of £150 million (approximately $235 million), while also providing the transferred chain with an £80 million loan.[21] On November 27, 2013, the sale to Yucaipa Companies was completed.[3] Yucaipa acquired 167 Fresh & Easy stores and closed approximately 40 of them.[22]
In a statement delivered shortly after the news was released, Burkle confirmed there would be changes to the stores' format, "to complete Tesco’s vision ... [and] make it even more relevant to today’s consumer."[23] In June 2014, Fresh & Easy initiated a reintroduction campaign, emphasizing affordable organics, made-on-the-premises takeout, freshness, and the avoidance of artificial colors and flavors.[22]
In its e-mail announcing the sale, Fresh & Easy said that customers would need to re-enroll in the Fresh & Easy Friends Card Loyalty program because "California state law does not allow the transfer of personal information of Friends Rewards members to the new buyer of Fresh & Easy"; after re-enrolling, "existing points and rewards balance will be honored."[24]
On March 22, 2015, Fresh & Easy announced that 50 of its stores would close to redeploy its money into development of an e-commerce shopping service.[25] 30 of the stores that would close were located in California.[26] The service, named Click & Collect, underwent testing at stores in the Las Vegas Valley in anticipation of a chainwide rollout.
Closure
On October 21, 2015, Fresh & Easy announced it was closing all of its stores. Brendan Wonnacott, a spokesman for the chain, said Fresh & Easy was starting "the process for an organized wind-down." According to Wonnacott, Fresh & Easy did not have enough cash and could not obtain financing to continue operating the business. In a Chapter 7 manner, stores would be liquidated and closed within the next few weeks.[27][28] The stores began a liquidation sale on October 24, 2015, and by November 13, 2015, all of their stores were closed, along with the termination of the Friends Rewards program.,[29] marking the death of the Fresh & Easy brand.
On October 30, 2015, Fresh & Easy filed for Chapter 11 bankruptcy for the second time in two years.[30]
After negotiations between Fresh & Easy, through their financial advisers, FTI Consulting, Inc. and Industrial Assets Corp., led by Venice Gamble (the Director of Legal & Business Development for Industrial Assets)[31]
