Tesco Plc (TSCO), the U.K.’s largest grocer, said a message to customers of its unprofitable U.S. Fresh & Easy unit was to reassure them about the future of the business rather than a response to a defection of shoppers to rivals.
“We talk to customers regularly,” said Tom Hoskin, a spokesman for Cheshunt, England-based Tesco, which said Dec. 5 it would likely exit the U.S. “In this case, we were reassuring Fresh & Easy’s customers that, while they might have seen that we are carrying out a review, stores are open and trading.”
Investment bank Greenhill is undertaking a strategic review of Fresh & Easy for Tesco, which plans to communicate progress in April when it presents full-year results. Tesco has invested 1 billion pounds ($1.6 billion) in the U.S. business, which hasn’t made a profit since it was formed in 2007.
“A strategic review always causes uncertainty, with competitors unnerving staff and customers,” said Clive Black, an analyst at Shore Capital in Liverpool, England. “So I’m surprised this campaign has taken as long as it has.”
In the message on its Facebook page, Fresh & Easy sought to downplay concern over the future of its 199 stores.
“We know there’s still a lot of interest and curiosity around the future of Fresh & Easy,” the chain said. “We appreciate the love. While we don’t know exactly what the outcome of this strategic review process will be, we want to assure you we don’t have plans to close stores and we’re confident Fresh & Easy can continue to be your favorite neighborhood market. In fact, we’re kicking off a new campaign this week so keep an ear out for our new radio spots.”
The Orange County Register newspaper in California reported yesterday that Fresh & Easy had e-mailed the message to customers.
Tesco said in December that approaches were made in recent months for all and part of Fresh & Easy, which has stores in Nevada, California and Arizona.
“Tesco will want to ideally sell Fresh & Easy as a going concern and it does not want to jeopardize that,” Black said.
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