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The Los Angeles Times chooses not to believe the optimistic face being put on Tesco’s Fresh & Easy Neighborhood Market operation in the western US by the company’s leadership, noting that Piper Jaffray senior analyst Mike Dennis has released a report saying that the stores aren’t generating enough shopper traffic and that “the ones that do come don’t buy very much.”

According to the story, “The chain, which is based in El Segundo, also is falling behind on store openings in California, Nevada and Arizona that are needed to leverage the huge investment the company has made in a distribution center and kitchen facility in Riverside, according to Dennis.

“What’s more, nearly one year after opening its first U.S. stores, the retailer hasn’t established much brand recognition and has been forced to offer deeper-than-expected discounts to generate even sluggish store traffic … Dennis said his research shows that most Fresh & Easy shoppers limit their purchases to produce and a few other items.”

The assessment by Dennis concludes that “Fresh & Easy needs a partner that better understands the U.S. market. He suggests that Tesco cut its losses by merging Fresh & Easy into a joint venture with an established American retailer with brand identity.”

KC's View:
I suspect that the inevitable denial from Fresh & Easy will come sometime this week, and they’ll attempt to put to rest any speculation that things are not going swimmingly. And there will continue to be strikingly divergent opinions about whether the stores are any good, about whether they are generating sufficient revenue, and whether they have a future.