Tesco promised break-even in two years. Fresh & Easy bled for six.
Tesco entered the US in 2006 planning up to £250m a year and break-even by year two. It reported a £142m trading loss in 2009, exited in 2013 with a write-down of about $1.5bn, and the chain closed in 2015.
Transcript
In February 2006, Tesco told the world it would do something few British grocers had managed: crack America. And it gave itself a number that would haunt it.
Tesco planned up to £250m of capital a year, and break-even by the second year of operation.
The chain was Fresh & Easy: small stores of about 15,000 square feet, a third the size of a typical US supermarket, in Arizona, California and Nevada, opening in 2007. Tesco had spent years studying American shoppers.
By April 2009, Tesco was reporting a trading loss of £142m from the chain. By December 2012, its own review showed Fresh & Easy would not break even until the end of 2013, or even 2014. In April 2013, Tesco's chief executive, Philip Clarke, confirmed the exit, with a write-down of about $1.5bn. Tesco's profits fell for the first time in 20 years. Fresh & Easy had 199 stores.
Under its next owner, Yucaipa, Fresh & Easy's losses were cut from $250m to $50m a year. It was still not enough. On October 30, 2015, the chain filed for Chapter 11 a second time, and every store closed.
Tesco promised break-even in two years, and the chain bled for six. When you enter a new market, decide in advance what result, by what date, means you stop. One failure does not prove small stores or America were wrong for every grocer.
The records behind this video
Every figure in the video comes from this Decision Record, each with its sources.
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