27 February, 2008 - Tesco has denied claims that its foray into the US market is in trouble after speculation that its Fresh and Easy discount grocery stores were under-performing.
The UK’s largest supermarket has launched around 50 outlets in and around Los Angeles, Phoenix and Las Vegas, and there have claims sales have fallen short of expectations.
UK sources have quoted analyst Mike Dennis of Piper Jaffray as raising question marks about the extent of the supermarkets' success in the US.
The retail expert is reported to have noted the stores could be performing below target by as much as US$30,000 per store per week – averaging sales of US$170,000 instead of a projected US$200,000. He added that the company’s longer-term earning projections could be hit by the sluggish performance.
However, Tesco said the stores were proving popular and both their sales and customer numbers were increasing.
Rival US chain Stater Brothers said they had seen no significant impact after Tesco had opened the stores in its commercial territory.
Dennis said that Tesco may have to consider overhauling its store concept, given the disappointing start to the venture to establish itself in the US.
However, it is believed Tesco is still planning to move ahead with opening a further 150 similar stores in the next 12 months, and has earmarked £1.25 billion for the project.