Changing of the Guard: Clarke Takes Over the Reins as Tesco CEO Wednesday

The Changing of the Guard at Tesco

A source at Tesco headquarters in Cheshunt, United Kingdom tells Fresh & Easy Buzz that incoming CEO Philip Clarke joined others today in wishing happy birthday to retiring CEO Terry Leahy, who celebrated his 55th birthday today, his last official day in the office as the leader of the world's third-largest food and grocery retailing chain and undisputed retail market leader in the UK, with nearly as much market share (about 31%) as its two leading rivals, Walmart-owned ASDA and Sainsbury's have combined.

Clarke, who's been Tesco's director of European and Asian retail operations as well as its director of information technology for a number of years, officially becomes CEO on Wednesday, March 2, which just happens to be the day Tesco's Fresh & Easy Neighborhood Market USA launches into Northern California, opening its first two stores, in San Jose and Danville. [See - February 14, 2011: First Look: Fresh & Easy Neighborhood Market Store in Northern California's Danville Set to Open on March 2; and January 17, 2011: First Look at the Willow Glen-San Jose Fresh & Easy Neighborhood Market Store Set to Open March 2, 2011.]

Sir Terry will be in the office tomorrow, we're told. But the day will mostly be ceremonial for the three-decade-plus Tesco veteran, who started as a stock clerk in a Tesco store while still in high school and has been CEO for the last 14-years.

Leahy might even leave the office a bit early tomorrow, as he prepares for what will be an active retirement as a private investor, part-time consultant to British Prime Minister David Cameron and head of an economic revitalization organization in the community where he lives. We suspect other ventures are in the works for the retiring CEO as well. After all, last week he trousered around $8 million by cashing in a couple million stock options. [See - February 28, 2011: Big Day For Tesco CEO Terry Leahy: Retirement and A Birthday But No Break-Even For Fresh & Easy USA On His Watch.]

Tesco and Leahy announced his retirement and Clarke's being named CEO on June 8 2010. And as part of the company's well-oiled succession process, Clarke has been working hand-in-glove with Sir Terry since then, trying on the CEO-shoes in order to get the best fit possible when he assumes the corner office at corporate headquarters on Wednesday. [See - June 8, 2010: Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

Among Clarke's metaphorical shoe-fittings was a recent trip to the U.S., which included nearly a week's worth of meetings and face-time with CEO Tim Mason at Tesco's Fresh & Easy Neighborhood Market headquarters in El Segundo, California, along with visits to Fresh & Easy stores in California, Nevada and Arizona. [See - February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market.]

A little bird told us one of the brief face-time activities Clarke had while visiting with Mason in February, who on March 2 also gets a new title - Tesco deputy CEO will be added to his current Fresh & Easy Neighborhood Market CEO title - along with a couple new corporate duties - overall responsibility for the company's branding and climate change initiatives - was some discussion about starting to use the Fresh & Easy chief's Twitter feed, which until recently was unused since being set up in 2009. [See - February 24, 2011: Dormant No More: Fresh & Easy Neighborhood Market CEO Tim Mason is Now Tweeting on Twitter.]

Mason, who will remain in Southern California and continue to spend the bulk of his time running Fresh & Easy, started tweeting on February 20, about five days after Clarke's departure, and has been posting those brief messages on his feed ever sense. (Since we published the piece linked above four days ago, the number of followers the CEO of Fresh & Easy has on his Twitter feed has more than doubled. Of course, correlation doesn't equal causality.)

Philp Clarke has no time to waste though. He must hit the ground running as Tesco's CEO on Wednesday, as he has many challenges facing him and very little CEO learning curve time available to him.

Among those challenges are: the struggling Fresh & Easy chain in the U.S. and Tesco's struggling operations in Japan, both which are losing money; maintaining the retailer's dominance in the UK amid stiff competition; and growing and improving the performance of Tesco's other global retail operations, particularly in China (but also elsewhere in Asia and in Europe), where as the head of Europe and Asia Clarke has put into place major growth plans. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market.]

Regarding China, Tesco today announced some new growth plans in the nation with the fastest-growing economy in the world.

The UK-based retailer says it's signed an agreement to set up a joint-venture to develop shopping malls in the world's most populated nation, which is a follow-on to a strategy its been doing for some time now with its Lifespace Malls project.

According to Tesco corporate spokesperson Greg Sage, 50% of the joint-venture will be owned by a consortium of leading Asian investors including Singapore's Metro Holdings.

The total value of the project is in the region of £170m ($276.5220) with Tesco and the joint venture consortium each investing approximately £30m ($48.7980) of equity. Debt will be provided by banks including the Industrial and Commercial Bank of China and Standard Chartered Bank, Sage said today.

This joint venture will comprise three shopping malls in Shenyang, Xiamen and Fuzhou, each of which includes a Tesco hypermarket as an anchor tenant. The Lifespace shopping malls are part of Tesco's long term strategy to invest in building a substantial business in China, Sage said. Tesco currently operates four Lifespace malls and 93 Tesco hypermarkets in China.

At home in the UK, Tesco on Sunday (February 27) launched a counter-attack directed primarily at but far from exclusively on Walmart-owned ASDA, which along with Sainsbury's are its two main competitors.

A couple months ago ASDA started a program in which it says it will match the retail prices of all its competitors in the UK, including Tesco. Along with the price program's launch, ASDA lowered the everyday prices on numerous everyday items in its stores. The program has generated much attention and irritated outgoing CEO Leahy, who's said that despite the ASDA price promise Tesco still has better overall everyday prices than the Walmart-owned competitor does.

But actions speak louder than words, and yesterday, just two days before Sir Terry departs, Tesco launched what it's calling its "Price Check" program, which includes lowering the everyday price on over 1,000 items. Like ASDA's price check program, Tesco's features a website (here) where shoppers can compare prices from various retailers.

Meanwhile, on Wednesday, when the official CEO changing of the guard takes place at Tesco's UK headquarters, its Fresh & Easy Neighborhood Market USA chain will open the first two of what are its first batch of 11 stores in Northern California set to open in March and April.

You can bet even though Wednesday, March 2 will be his first official day as Tesco's CEO, and it will be a very busy first day at that, Philip Clarke will be taking a bit of time out of that very busy first day as CEO to check in on the two stores opening across the pond in the San Francisco Bay Area, which along with the rest of California is where Tesco is focusing nearly all of its new store growth this year.

It's also not lost on Clarke, or on observers like Fresh & Easy Buzz, that the first stores in Fresh & Easy Neighborhood Market's Northern California launch, which originally was planned to happen in early 2009 but was postponed because of what Tesco said was the bad economy but was equally due to Fresh & Easy's poor performance and bleeding of cash, are opening on March 2, the same day Clarke officially becomes CEO.

A fresh start for Tesco. A fresh start for Fresh & Easy. Perhaps that's what the symbolism of the March 2 timing could (or should) be viewed as?

Follow the Changing of the Guard at Tesco on Fresh & Easy Buzz

February 28, 2011: Big Day For Tesco CEO Terry Leahy: Retirement and A Birthday But No Break-Even For Fresh & Easy USA On His Watch

February 25, 2011: A Parting Gift: Retiring Tesco CEO Terry Leahy Exercises Options and Sells Nearly Three Million Shares of Company Stock

February 24, 2011: Dormant No More: Fresh & Easy Neighborhood Market CEO Tim Mason is Now Tweeting on Twitter

February 23, 2011: 'The Insider' - Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market

January 27, 2011: Incoming Tesco CEO Philip Clarke Names Expanded Corporate Executive Committee

October 8, 2010: 'The Insider' - Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA

October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market

October 4, 2010: Tuesday's Tesco Interim Report Offers A Road Map of Sorts For the Future of Fresh & Easy Neighborhood Market

September 13, 2010: 'The Insider' - Reading Philip Clarke's Tea Leaves: Might A Mixed Corporate/Franchise Model Be in Fresh & Easy Neighborhood Market's Future?

June 12, 2010: 'The Insider' - Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

June 8, 2010: Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

Veteran Grocer-Stater Bros. CEO Jack Brown Receives Congressional Medal of Honor Society's 'Patriot Award'

Stater Bros. chairman and CEO Jack Brown (middle) is presented with the Congressional Medal of Honor Society "Patriot Award" on Saturday, February 26, 2011, at the Ronald Reagan Presidential Library in Simi Valley, California. The award was presented by Vietnam Medal of Honor Recipient James A. Taylor (right). Pictured on the left is the co-host of the event, Bruce Brereton

Southern California Market Region - and Beyond

"Any nation that does not honor its heroes will not long endure."

- President Abraham Lincoln

"A nation reveals itself not only by the men it produces, but also by the men it honors, the men it remembers."

- President John F. Kennedy

On Saturday (February 26) veteran California grocer Jack Brown, chairman and CEO of San Bernardino, California-based Stater Bros. Supermarkets, was honored for a lifetime of service to his country by the Congressional Medal of Honor Society, which awarded the U.S. Navy Veteran its Patriot Award, the highest honor and award the organization can bestow upon an individual.

Brown, who went to work in the food and grocery retailing industry in 1962 following his Navy service aboard the U.S.S. Interceptor and the U.S.S. General J.C. Breckinridge in the Pacific, and who's lead Stater Bros for over three decades, received the prestigious award at a gala black-tie reception and dinner -The Celebration of Freedom Gala - at the Ronald Reagan Presidential Library in Simi Valley, California. The event was sponsored by the Congressional Medal of Honor Foundation.

The Stater Bros. chief was among well-known company at the gala. Other Americans being honored on Saturday were former U.S. Secretary of Treasury and Secretary of State George Shultz, who received the society's Distinguished Citizen Award.

Additionally, the foundation each year presents The Bob Hope Award for Excellence, in honor of the late entertainer who spent decades bringing good cheer to soldiers, airmen (and women) and marines serving overseas. The recipients of this year's Bob Hope Award are singer/actresses Connie Stevens and Ann-Margret, who traveled with the comedian to military bases and war zones throughout the world, including making a number of trips to Vietnam during the war, to entertain soldiers far from home.

In March 2010, the Stater Bros. CEO received his first award from the Congressional Medal of Honor Society for his years of contributions to the society and" for his dedication to promoting and perpetuating the principles upon which our nation was founded: 'Courage, Sacrifice and Selfless Service,'" according to the citation. The award was presented to Brown in person by five Medal of Honor Recipients.

According to our research, Jack Brown is the first CEO of a U.S. food and grocery retailing chain to be honored with such an award by the Congressional Medal of Freedom Society. In fact, he's the first grocer at all, regardless of position or title, we've been able to find to be so honored.

Former sailor Jack Brown has made active-duty members of the U.S. Military and service veterans a focus of his efforts during his many years as CEO of Stater Bros.

For example, he and Stater Bros., which is celebrating its 75th anniversary this year, have guaranteed the jobs of over 200 company employees who over the last decade have been called into active-duty to serve in Iraq and Afghanistan. In addition, Stater Bros. pays the employees' their weekly wages minus military pay, along with continuing to offer medical, dental and vision benefits for their families while the employees are serving their country.

Stater Bros. Charities, which CEO Brown and the grocery chain created in 2008, also includes active-duty members of the military and service veterans in its charitable efforts. As an example, Stater Bros. Charities recently donated three handicapped-equipped transport vans to the Veterans Administration Hospital in Loma Linda, California. The vans are used to transport local veterans to and from their doctor's appointments.

Since 2008, the supermarket chain's charitable foundation has donated more than $4 million "to support the most critical needs in Southern California communities," according to Susan Atkinson, Stater Bros. vice president for corporate affairs.

Personally, Jack Brown has for decades been and continues to be involved in a myriad of community organizations and good deed efforts in Southern California, where Stater Bros. operates 167 supermarkets and employs more than 18,000 workers.

Mentoring and helping to create educational opportunities, particularly in higher education, for young people and helping children in-need are two areas where "Citizen Jack Brown" is devoted to making a difference.

For example, in recognition for his efforts in the higher education arena, in July 1992, California State University, San Bernardino named a then brand new five-story campus building "Jack H. Brown Hall." The building is home to the university's College of Business and Public Administration, Department of Computer Science, and math department.

Brown, who started out in college at San Jose State University on a football scholarship and then transferred to UCLA, majoring in Business Administration, has been an adjunct professor at Cal State San Bernardino since 1993. He also attended San Bernardino Valley Community College, which in 1993 presented the grocer with its Distinguished Alumni Award for that year.

In 2005, the California State University, San Berhardino campus trustees awarded the Stater Bros. chief an Honorary Doctorate of Humane Letters "for his excellence and extraordinary achievement in significant areas of human endeavor and to honor meritorious and outstanding service to the California State University - to campuses, individually, or to humanity at large," according to the citation.

Brown also served for a decade as a trustee of the private University of Redlands in Southern California. In 2007, the university awarded Brown an Honorary Doctorate of Humane Letters "for his significant contributions to cultural, educational, economic, social and humanitarian service to the University of Redlands and for his leadership and achievement in building a more humane society."

Brown is also a "fellow" at the University of California, Riverside, an honor bestowed on the grocer in 2001. It's the highest honor the university awards to those who support higher education and have a history of community involvement.

The Stater Bros. CEO is the Founding Chairman of Children's Fund of San Bernardino County, a public/private agency devoted to protecting abused and at-risk children. the organization has served over one million at-risk children in the last 25 years, according to Atkinson.

Jack Brown the grocer, who's a native of San Bernardino where Stater Bros. is headquartered, is a walking website of information about the history of U.S. food and grocery retailing, particularly in California and the west.

The six decade-plus year industry veteran got his start in the business at the ripe young age of 13, when he was hired as a box boy (no paper or plastic option then; in fact empty grocery product boxes were the carrier of choice for customer's purchases at the time) at Berk’s Market Spot in San Bernardino, following the death of his father.

From there, after active duty with the Pacific Fleet and college, it was on to progressively more responsible positions in food retailing for Jack Brown. Those positions include: a stint as vice president of sales and merchandising for Sage’s Complete Markets in San Bernardino; and tenure as corporate vice president for Marsh Supermarkets, Inc., in Indianapolis, Indiana.

Before taking the helm at Stater Bros., which had sales in 2010 of 3.6 billion, Brown was president and CEO of Pantry Food Markets in Pasadena, California and president and CEO of American Community Stores Corporation, Omaha, Nebraska.

Brown, who's spent the last three decades of his career heading Stater Bros., has also been honored by the food retailing industry. For example, in 2005, he received the "Sidney R. Rabb Award," the Supermarket Industry’s highest award, from the Food Marketing Institute (FMI), "for a lifetime of exceptional service to the community, customers, and the industry." He's served on the board of FMI and as the vice chairman of the U.S. supermarket industry's leading national trade association.

The California Grocers Association (CGA) also honored Brown with its highest award in 2001, presenting the grocer with its Hall of Fame Achievement Award "for a lifetime of dedication to the grocery industry." The CGA is the major trade association for grocers in California and neighboring states.

Receiving the Patriot Award on Saturday at the Reagan Library in Simi Valley, which isn't far from Brown's office on the Stater Bros. campus in San Bernardino, is in many ways the award of awards for a man who's received many (we've only mentioned a few in this piece). But Jack Brown, who still loves the grocery business at an age when most CEO's are ready to hang up their pinstriped grocery aprons and gold-plated box cutters and relax a bit, isn't going away just yet. Instead he continues to head to the office each day to lead the troops, out to the chain's stores, which Brown visits regularly, and out into the community where, particularly in Southern California's Inland Empire region where Stater Bros. is based and where most of its 167 stores are located, he's most often referred to as just plain old Jack, an old school grocer in the best sense of the phrase, a valued neighbor - and a patriot.

Big Day For Tesco CEO Terry Leahy: Retirement and A Birthday But No Break-Even For Fresh & Easy USA On His Watch

The Changing of the Guard at Tesco

News/Analysis/Commentary

Most of the talk (and wins) at last night's Academy Awards gala in Hollywood, California was about the multi-Oscar Nominated movie "The King's Speech," which nabbed four wins out of 12 nominations, including for Best Picture. British actor Colin Firth also won the best actor Oscar for his portrayal of a proud yet stuttering King George VI in the hit film.

But later today across the pond at Tesco's corporate headquarters in Cheshunt, United Kingdom employees and friends will be celebrating another favorite British son of Irish ancestry, Terry Leahy (pictured at top), and likely asking the retiring CEO to make his own speech or two, as the staffers at the company he's lead for 14-years not only celebrate his retirement but also Sir Terry's 55th birthday, which is today.

There will no doubt be cake and beverages at the Tesco campus today, along with a few gifts for Sir Terry, as in addition to celebrating his birthday it will be his last official day in the office before he turns over his pinstriped grocery apron and corner office to director of international operations and information technology and incoming CEO Philip Clarke, who not only currently lives in the same neighborhood as Leahy but was also born and raised in the same city, Liverpool, as the man he's replacing, and started with Tesco over three decades ago as a store stock clerk, just like the retiring CEO did.

Not that Sir Terry needs any gifts. As we reported on Friday, Leahy gave himself a parting gift last week, trousering about £5,174,751.1 (pounds), or $8,357,223 million (U.S.) in stock options - perhaps as a small retirement nest egg or the start of his first private investment fund. The outgoing CEO has said one of the things he will do after he retires from Tesco will be private investment, including perhaps as an angel investor for small start-ups. [See- February 25, 2011: A Parting Gift: Retiring Tesco CEO Terry Leahy Exercises Options and Sells Nearly Three Million Shares of Company Stock

When it comes to the uncanny similarities between outgoing CEO Leahy and incoming CEO Clarke, some observers might say..."Meet the new boss, (almost) the same as the old boss." But despite their respective Liverpool origins and other similarities, Leahy and Clarke are different in many ways.

Clarke, however, must be the same as Sir Terry in the one way that ultimately counts: Ensuring Tesco remains the dominant retailer in the United Kingdom, along with becoming the second-largest global retailer, after Walmart, which has been Leahy's and thus the Tesco board's goal, in tandem with his fierce 14-year battle to make Tesco the UK's retailing top dog, which it is.

As he departs the company he's been with for over three decades, Sir Terry leaves Tesco with a market share (about 31%) that's nearly equal to that of its two leading competitors, Walmart-owned ASDA and Sainsbury's, which dominated Tesco in the sales of food and groceries in the UK when Leahy took the helm 14-year's ago.

Like him or not - and most people do like him - as the CEO of Tesco for the last 14-years Terry Leahy has been a combination overall solid strategic thinker (the corner office executive he became) and street fighter (the stock boy from Liverpool he started as).

For example, he recognized the importance of making Tesco a significant global retailer, particularly moving into emerging markets in Eastern Europe and Asia, long before most grocers, including all but a couple in the U.S., even thought about the concept. Today Tesco is one a just a handful of truly global food and grocery chains.

Back home in the UK it was under Leahy's leadership that Tesco basically launched a retailing version of carpet bombing (the street fighter) in terms of opening stores of various sizes in every city, town and village in the nation. Every municipality in the UK today has at least one Tesco-owned store. Most have many.

This strategy includes multiple formats, from superstores to the small Tesco Express convenience-oriented grocery markets, along with building the stores from-the-ground-up along with converting nearly every imaginable type of commercial building, including numerous pubs, into Tesco-owned stores. There's even a former church building in the UK that's today a Tesco Express store. Tesco kept the church facade in place and built around it.

Leahy has made mistakes, of course - who hasn't after 14-years as CEO of a major retail chain. But the successes out weight the mistakes overall, in our analysis.

But most of Sir Terry's mistakes, in our analysis and opinion, are more recent and have to do with Fresh & Easy Neighborhood Market USA, which is his baby, but now Philip Clarke's responsibility.

Sadly, one of Leahy's biggest mistakes vis-a-vis Fresh & Easy, in our analysis and opinion, is that he didn't make a number of significant changes that have been and are needed since the first stores opened in November 2007. We aren't going to detail those changes here. If you read through the three-plus years' worth of stories and posts in Fresh & Easy Buzz, you'll find numerous examples of which we speak.

But we also give Sir Terry credit for having the balls to launch a from-scratch food and grocery chain in America, focusing it on California, which not only is the biggest food and grocery retailing market (state) in the U.S. but also among the most competitive, along with being a very expensive place to launch a new chain.

Of course, one can reasonably argue that what we call "balls" is just another word for foolish. And there's plenty of room to argue that doing what Leahy and Tesco did with Fresh & Easy, and where they did it in the U.S. - California, Nevada and Arizona - is mostly folly.

But tomorrow is Sir Terry's birthday. So we wish the "happy warrior of retail" an enjoyable one, along with a fun and productive retirement.

Leahy leaves a fairly big executive grocery apron for Philip Clarke to fill. But he also leaves a big and expensive challenge, and a bit of a mess - Fresh & Easy Neighborhood Market USA - for the incoming CEO.

But If Clarke can look at Fresh & Easy with a fresh set of eyes, which it very much needed, make the needed changes, which include needed strategic as well as other changes, and get the fresh food and grocery chain to break-even by the end of Tesco's 2012-13 fiscal year, which is for all practical purposes the end of December 2012, then he will likely earn his Tesco wings.

Tesco says it expects in a few months to report a loss for Fresh & Easy in the same range as last year's loss, about $250-259 million for the current (2010/11) fiscal year, which ends tomorrow. Tesco reported a mid-year loss of $151 million for Fresh & Easy. There are currently 164 Fresh & Easy markets in California, Nevada and Arizona. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market.]

But first Philip Clarke, who recently returned from a visit to America and Fresh & Easy Neighborhood Market [February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market] has to decide if he really wants to keep Sir Terry's creation, Fresh & Easy, operating, and losing millions of dollars each week, for another two years.

Clarke has said publicly he and Tesco deputy CEO and Fresh & Easy Neighborhood Market CEO Tim Mason are four square behind Fresh & Easy and plan to achieve the goal of break-even in two years. But we believe the jury of one (Clarke's mind/decision-making process) is still out on whether he will stay the course or pull the plug on Fresh & Easy USA before the end of Tesco's fiscal 2012/13.

Stay tuned.

The Changing of the Guard at Tesco: Related Stories

February 25, 2011: A Parting Gift: Retiring Tesco CEO Terry Leahy Exercises Options and Sells Nearly Three Million Shares of Company Stock

February 24, 2011: Dormant No More: Fresh & Easy Neighborhood Market CEO Tim Mason is Now Tweeting on Twitter

February 23, 2011: 'The Insider' - Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market

January 27, 2011: Incoming Tesco CEO Philip Clarke Names Expanded Corporate Executive Committee

October 8, 2010: 'The Insider' - Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA

October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market

October 4, 2010: Tuesday's Tesco Interim Report Offers A Road Map of Sorts For the Future of Fresh & Easy Neighborhood Market

September 13, 2010: 'The Insider' - Reading Philip Clarke's Tea Leaves: Might A Mixed Corporate/Franchise Model Be in Fresh & Easy Neighborhood Market's Future?

June 12, 2010: 'The Insider' - Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

June 8, 2010: Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

A Parting Gift: Retiring Tesco CEO Terry Leahy Exercises Options and Sells Nearly Three Million Shares of Company Stock

Pictured above: Retiring Tesco CEO Terry Leahy (middle) listens to British Prime Minister David Cameron (left) as the two men, along with Peter Nears of Peel Holdings (right) tour the £4.5 billion Wirral Waters development on January 6, 2011 in Wirral, England. Wirral Waters, which is designed to develop and use the mostly unused dock space on the site, is the biggest regeneration development of its type in Britain. Click here to learn more about the project. Sir Terry Leahy is a member of the City Region Local Enterprise Partnership, which is involved in the Wirral Waters regeneration development. Cameron met with the board on January 6. [Photo credit: WPA Pool/Getty Images Europe.]

The Changing of the Guard at Tesco
News/Analysis/Commentary

Outgoing Tesco CEO and director Sir Terry Leahy will have a little walking around money to spend when he retires from the United Kingdom-based global retailer in March. Tesco, the third-largest retail company in the world, owns El Segundo California-based Fresh & Easy Neighborhood Market in the U.S., along with having stores in the UK, Europe and Asia.

On Wednesday (February 23, 2011), Leahy, 55, who's been CEO for 14-years and joined Tesco over three decades ago as a teenager, exercised stock options on 2.996.032 million shares of Tesco plc stock at various option prices, and sold the shares, resulting in a tidy profit for the man who's so closely associated with the UK-based retailer that he's often referred to in Britain as "Tesco Terry," according to a regulatory filing issued yesterday by the company. The options were acquired by Sir Terry under the company's Executive Share Option Scheme. [The regulatory filing is here.]

Based on our calculations, the exercising of the options and sales of the shares on Wednesday by Leahy, at the prices noted in the regulatory filing linked above, resulted in a pre-tax payday for the retiring CEO we estimate to be around £5,174,751.1 (pounds), or $8. 357. 223 million (U.S.).

Our estimate is based on the data provided in Tesco's regulatory filing news release issued yesterday. We arrived at the estimated figures by multiplying the number of shares by the difference in the selling price and the option price. We emphasis that ours is just that - an estimate.

When he retires as CEO next week, Sir Terry will be severing all his formal ties with Tesco. He isn't staying on as a non-executive member of Tesco's board, for example, nor is he remaining at Tesco in any advisory capacity.

Philip Clarke, who is Tesco's CEO-designate and its director of Europe and Asia operations and corporate information technology will assume the CEO position from Leahy as part of a formal succession process that's been going on at the company since June 2010.

When he and Tesco announced his March 2011 retirement plans last summer, on June 8, 2010, Leahy mentioned that one of his post-retirement plans was to become a private investor. Perhaps the exercising of the options on Wednesday and the sale of the resulting shares will comprise the first official fund Sir Terry creates and puts to work when he officially becomes "investor Leahy," when he retires next week? Leahy holds additional Tesco stock, which he's accumulated over many years.

Outgoing Tesco CEO has also been asked by British Prime Minister David Cameron to work on a number of economic and environmental issues in an advisory capacity for his administration, something Sir Terry has already started doing a bit of. Leahy supported and campaigned for Cameron over Gordon Brown in the 2010 election.

We suspect Leahy to get more involved in public service post-retirement, including further advising and helping the current British PM. But we doubt Leahy has any desire to be appointed to an official government position in the Cameron government, although we could be wrong.

After all, Sir Terry is only 55-years old. He's spent 14-years heading Britain's most well-known company - Tesco - which not only is the number one retailer of food, groceries and general merchandise in the UK, it also has a banking and finance division (Tesco Personal Finance and Tesco Bank), sells insurance, is a major mobile phone carrier and more. And as a result of being "Tesco Terry" all these years, he has among the highest recognition levels of any single person in the nation.

On top of that, he's become known in the UK and globally as a leader in the climate change reduction movement, along with being seriously involved in other environmental conservation issues.

If you add up all the factors noted above - the right age (55), high recognition level among the public, solid business and executive experience at home and globally, knowledge of economic and environmental issues, a proven jobs creator, generally well-liked as Tesco's CEO - some might suggest they're not bad credentials for getting into politics - perhaps getting elected as an MP, then using that position to become Prime Minister.

We don't think that's the post-retirement career path outgoing Tesco CEO Terry Leahy has in mind - but perhaps he should look into it.

After all - he doesn't need the money post-Tesco. And the UK government could sure use a political leader or two who actually has created a job or two. Or in the case of soon-to-no-longer be "Tesco Terry" but rather just plain old Sir Terry - one who's created tens of thousands of jobs at home during the 14-years he's been the CEO of Tesco, which today is the largest private sector employer in the UK.

Dormant No More: Fresh & Easy Neighborhood Market CEO Tim Mason is Now Tweeting on Twitter

The Changing of the Guard at Tesco

News/Analysis/Commentary

Breaking Buzz: Fresh & Easy Neighborhood Market CEO Tim Mason (pictured above in a Fresh & Easy store) is tweeting, as in posting those no-greater than 140-character messages on one of the world's most-popular and fastest-growing social media and messaging sites, Twitter.com.

Mason himself, or one of his staff members, set up a Twitter feed in 2009 for the CEO, which for over two years hasn't been graced with a single tweet by the head of Tesco's El Segundo, California-based Fresh & Easy Neighborhood Market fresh food and grocery chain, which as of today has 164 stores in California, Nevada and Arizona -- until now.

The CEO of Fresh & Easy Neighborhood Market posted his very first tweet on Sunday, February 20, apparently shortly after enjoying a ski trip to Vail, Colorado, where he spotted First Lady Michelle Obama on the slopes. Tim Mason's first tweet on February 20, 2011: "Inaugural tweetThe first lady looking good skiing in Vail. Very cool in grey,same brand of ski jacket as my wife, I managed to get a photo."

The First Lady indeed was on a trip to Vail during the extended President's Day holiday weekend, as was announced by the White House and has been reported on by numerous national media outlets.

Mason looks to have enjoyed posting his first tweet on February 20; so much so in fact he followed it up with four additional tweets on the same day.

Two of those additional February 20 tweets involve a bit of lobbying Mason was doing at the California State Capital in Sacramento, including a visit with Assembly Speaker John Pérez (D-Los Angeles), who prior to getting elected in 2008 to represent the people of Los Angeles' 46th District was the political director for the United Food & Commercial Workers (union) Local 324.

The United Food and Commercial Workers (UFCW) union, including local 324, has been trying to organize Fresh & Easy Neighborhood Market's store-level employees since the first batch of stores were opened in November 2007, as we've reported on and written extensively about here.

Pérez was elected Assembly Speaker in January 2010. His career in the organized labor movement spans 15-years.

Here's what (italics) the CEO of Fresh & Easy Neighborhood Market "tweeted" on February 20, about a visit he had on Friday, February 18, with Assembly Speaker Perez: "Friday in Sacramento,speaker Perez gave me a plastic duck. Grand office,large plastic duck collection."

Interestingly, a second (the fourth out of the five tweets) February 20 tweet had to do with First Lady Michelle Obama, once again on the ski slopes in Vail.

The fifth February 20 tweet is about starting the day off with coffee beans from Fresh & Easy.

Mason followed up his five tweets on February 20 with one on February 21, one on February 22, and one yesterday, February 23, for a total of eight so far. Mason's last tweet, from yesterday: "The talk of the Capitol last week.Gov. Brown has replaced the table in his office with a picnic table.I guess so he can say this ain't no..." (There is nothing more after the no... Perhaps it's coming today?)

There were no February 24 tweets at the time this piece was published. But if the current track record holds out...expect at least one later today.

If you want to read the tweets not included in this piece, you'll have to find Tim Mason's feed on Twitter.com.

Mason currently has 40 followers - and is currently following three of those 40 followers - the Fresh & Easy Neighborhood Market feed, Fresh & Easy director of marketing Simon Uwins, who hasn't tweeted since October 1, 2009 and - most importantly - his new boss, soon-to-be Tesco CEO Philip Clarke, who's been "tweeting" since November 2010.

We're willing to bet Fresh & Easy CEO Mason's Twitter feed follower-count goes up a bit past the current 40-followers after this post is published.

As our 'The Insider' columnist reported yesterday - February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market - the Fresh & Easy Neighborhood Market CEO's new boss, Philip Clarke, just recently spent 10 days or so, from February 6 -to- February 15, in the U.S., including at Fresh & Easy's Southern California headquarters with Tim Mason, who is adding the title of Tesco deputy CEO to his current one as CEO of Fresh & Easy.

Clark, who officially becomes Tesco's CEO in March but is already sharing duties with outgoing CEO Terry Leahy, comes to Tesco's corner office having held two senior executive positions at Tesco, which he joined in 1974 - head of Europe and Asia operations and chief of corporate information technology.

It's that latter position that makes Clarke a bit more keen on the Internet and particularly the use of social media that outgoing CEO Leahy was. And in November of last year, Clarke, who had been named Tesco's CEO-designate not long before that, started his Twitter feed, posting his first tweet on November 4, 2010.

As incoming CEO, Clarke is putting a greater emphasis on the use of social media, including Twitter, at Tesco, and among its executives, both those based at corporate headquarters in the United Kingdom and elsewhere around the globe.

Tesco UK has been using Twitter under Terry Leahy's charge. The retailer set up a food-oriented "Tesco Food" Twitter-feed last year, which its been using regularly.

In 2010 Tesco also started a couple special-interest Twitter feeds, including one focusing on clothing, which it sells in many of its stores in the UK, Europe and Asia. It's using the feed regularly at present.

Tesco has had a corporate Twitter feed, "Tesco Stores," since 2009. However, just two tweets, both posted on April 3 2009, have been made on the site despite the fact it has over 5,000 followers. We're told Philip Clarke plans to change that inactivity as part of his emphasis on the greater use of social media at Tesco.

Fresh & Easy Neighborhood Market launched its Fresh & Easy Twitter feed in mid-2008 and has been regularly active on it since then, using it well in a number of ways, in our analysis.

Fresh & Easy CEO Mason's first tweet, on February 20, 2011, came a mere five days after his new boss, Philip Clarke, departed Los Angeles on February 15 to return home to the United Kingdom, according to 'The Insider's column linked above and published yesterday.

If the timing between Clarke's arrival and departure at Fresh & Easy headquarters in El Segundo California - February 10 -through-February 15 - and Tim Mason's beginning to tweet on February 20, after having his Twitter feed sitting dormant for over two years, isn't simply a mere coincidence, which sources tell us it isn't, then it appears incoming Tesco CEO Philip Clarke is a pretty good motivator when it comes to social media adoption and use among his key executives.

Fresh & Easy Buzz, which is on Twitter @FreshNEasyBuzz, welcomes Tesco deputy CEO and Fresh & Easy Neighborhood Market CEO Tim Mason to Twitter.

And now that Fresh & Easy chief Mason is tweeting, we wonder if a new tweet will be forthcoming from Fresh & Easy Neighborhood Market director of marketing Simon Uwins, who's most recent update was in 2009.

After all, if Philip Clarke can motivate Mason to tweet for the very first time, Mason, who is Uwins' boss and prior to moving to the U.S. to head up Fresh & Easy in California was in charge of corporate marketing at Tesco in the United Kingdom, might want to follow Clarke's example, and have a Twitter-chat with Uwins, one marketing guy to another, letting him know that incoming Tesco CEO Philip Clarke doesn't like dormant Twitter feeds. Just a thought. After all, marketers should set the example when it comes to social media and social media marketing, shouldn't they?

Related Stories

We've written extensively in Fresh & Easy Buzz about the use of social media, including Twitter, in the food and grocery retailing industry, by Tesco's Fresh & Easy, other retailers, and in general. To read a selection of those stories, click on the following links: Fresh and Easy on Twitter, grocers and social media, Grocers on Twitter, Twitter, F-E Gal, iKristen.

Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market

The Insider - Heard on the Street
The Changing of the Guard at Tesco

In October 2010, a few months after being named CEO-designate of Tesco on June 8, Philip Clarke (pictured at top), who officially takes over the corner office from Sir Terry Leahy at the global retailer's headquarters in Cheshunt, Hertfordshire, United Kingdom next week, said he planned to visit the U.S. and take a top-to-bottom look at Tesco's fledgling Fresh & Easy Neighborhood Market chain, which after opening two new stores in Southern California today now has 164 fresh food and grocery stores in California, Nevada and Arizona.

In a column on June 12, 2010, a few months before incoming Tesco CEO Clarke publicly mentioned his plans to visit Fresh & Easy's headquarters in El Segundo, California and a sampling of the stores in California, Nevada and Arizona, I suggested he do just that, asking in the column: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

In another column, on October 2010 - Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA - I suggested not only how important such a visit, both for Philip Clarke's good as incoming CEO and that of Tesco and its Fresh & Easy chain's future (and for Tesco investors), but also offered a suggestion to Clarke about how he might approach the retailer's U.S. operations, as you will see if you read the column at the link above.

Following Clarke's signing off late last year on Fresh & Easy Neighborhood Market CEO Tim Mason's strategy designed to get Tesco's U.S. fresh food and grocery chain to break-even, there was much speculation in the press and among analysts, particularly in the UK, as to whether or not Clarke would make a trip to visit Fresh & Easy Neighborhood Market's operations and stores prior to becoming CEO in March. Clarke sparked some of this speculation himself when a couple UK publications he gave interviews to reported him saying he didn't need to visit Fresh & Easy in order to sign off on the strategy noted above.

But I, and Fresh & Easy Buzz, have said all along that Philip Clarke would be making such a trip to America before he takes over as Tesco's CEO.

And in my column today, while I can't report on the state of Mr. Clarke's "imagination" vis-a-vis Fresh & Easy USA (although I can report on a couple of his perceptions and emotions following the trip, which I will do at the end) - I can report that the Tesco CEO-designate has made a trip to the United States, including spending time at Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, along with visiting some Fresh & Easy stores in California, Nevada and Arizona, as well as a few stores operated by competitors.

Incoming Tesco CEO Clarke's just-completed trip to the U.S., which included an investor relations roadshow and visits with key Tesco investors in the U.S., began on February 6, when he landed in New York. He left the U.S. on February 15, arriving back home in the United Kingdom on February 16.

After spending a couple days in New York, Clarke and company hit Boston (on February 8); Omaha, Nebraska - home of major Tesco investor Warren Buffett - Denver, Colorado; and Sante Fe, New Mexico (all on February 9), where he and his team had a meeting with investors that afternoon. (Yes, there was some informal future Fresh & Easy market region scouting going on - but it wasn't the primary or even secondary reason for the visits to those cities, according to my sources.)

From New Mexico, Clarke and his team flew to San Francisco, arriving in the City-by-the-Bay on February 10. Tesco has two Fresh & Easy stores set to open soon in San Francisco, along with a third location waiting in the wings. And as Fresh & Easy Buzz has reported, the retailer is searching for additional locations in the city. [See - February 1, 2011: Tesco's Fresh & Easy Neighborhood Market Still Plans April-May 2011 Openings For First Two San Francisco Stores; and January 26, 2011: Fresh & Easy Neighborhood Market is On A Mission - In San Francisco's Mission District.]

After San Francisco, Clarke flew to Southern California, using it as his base from February 10 -to- 15 to visit Fresh & Easy stores in the region and in Nevada and Arizona, along with spending time at Fresh & Easy's corporate headquarters in El Segundo, where he met with Tesco director and Fresh & Easy Neighborhood Market CEO Tim Mason, who will get the added title of Tesco deputy CEO on March 1, and various executives and headquarters employees.

Philip Clarke also visited Fresh & Easy's distribution center and fresh foods production kitchen in Riverside Country, California on Valentine's Day (February 14), where among other activities he taste-tested a number of fresh-prepared meals and side-dishes sold in the Fresh & Easy markets. Word is the Chicken Fontina and Broccoli and Cranberry salad were his favorites.

Visits to some Fresh & Easy stores, and those of a few of its competitors in Southern California, metro Las Vegas, Nevada and metro Phoenix, Arizona, were high on Clarke's itinerary sheet during his visit, as I noted earlier.

Below are the highlights of some of incoming Tesco CEO Clarke's store visits during his time in the Western USA:

>Metro Phoenix, Arizona: On February 11, Clarke visited at least three Fresh & Easy markets in metro Phoenix, along with a Kroger Co.-owned Fry's supermarket and a store operated by locally-based grocery chain Bashas'.

>Metro Las Vegas, Nevada: The following day, February 12, Clarke visited a number of Fresh & Easy stores in metropolitan Las Vegas, Nevada, including the unit at Durango and El Capitan, where he admired the display of $10 per-dozen roses, which Fresh & Easy Neighborhood Market was advertising in its Valentine's day ad circular and promoting in-store for the holiday week. While in Las Vegas, Clarke also visited a few competitor's stores, according to sources.

>Southern California: Back in Southern California, the incoming Tesco CEO toured a number of Fresh & Easy Neighborhood Market stores in the region, where as of today Tesco operates 101 of its 162 small-format fresh food and grocery stores.

Among the Fresh & Easy stores Clarke visited in Southern California were the Manhattan Beach unit, which is the closest Fresh & Easy store to corporate headquarters in El Segundo - and the one Fresh & Easy CEO Tim Mason likes to take guests to visit. The store, which is one of the better-performing Fresh & Easy markets, also recently acquired a new produce department, along with a new floor. Word is Clarke likes the Manhattan Beach store, which is located just a head-of-lettuce-throw-away from a Trader Joe's market. [Take a look at the store, and the nearby Trader Joe's, here.]

Additionally, the soon-to-be-CEO visited a Fresh & Easy store in Burbank, which has an in-store coffee shop/bakery, something the grocer is testing. Interestingly, its also something Fresh & Easy Buzz first suggested nearly three years ago, and has mentioned since, that Fresh & Easy Neighborhood Market should include in some of its stores. The Burbank store (at Olive and Verdugo) opened on April 7, 2010. It was the 150th Fresh & Easy market opened by the chain. Since the Burbank store opened in April 2010, the grocer has opened 12 additional stores, nine of which have been opened so far this year.

Clarke also toured a Whole Foods Market store in Southern California while in the region; a visit he's reported to have proclaimed to be "quite fun," according to an excellent source.

Word is, not only was this the first time incoming Tesco CEO Philip Clarke has visited any of the Fresh & Easy stores, its also the first time the United Kingdom native, born and raised in Liverpool, England just like outgoing Tesco CEO Terry Leahy was, has visited grocery stores at all in the Western United States. Clarke has been with Tesco since 1974.

That Clarke hasn't visited the Fresh & Easy stores prior to his recently-concluded trip isn't all that unusual though. In his current positions as chief of Tesco's European and Asia retail operations and head of corporate IT, the soon-to-be-CEO wasn't directly involved in the planning, launching and operations of Fresh & Easy in the U.S. Instead, the U.S. chain, which was the idea of outgoing CEO Leahy, has been the focus of Tesco director and Fresh & Easy Neighborhood Market CEO Tim Mason, who as his CEO title reflects, has had charge of the launch and operations, reporting directly to Leahy.

Mason will be officially adding the title Tesco deputy CEO to his resume, along with retaining the Fresh & Easy CEO title, on March 11. However, he will report to incoming CEO Philip Clarke, who will have full responsibility for running Tesco's growing global retailing empire.

Tim Mason will add a couple new corporate duties to his management shopping cart though, taking responsibility for Tesco's branding and its climate change initiatives. Prior to coming to the U.S. to start up Fresh & Easy Neighborhood Market in 2006, Mason was Tesco's corporate marketing chief, as well as a member of the company's board, a position he retains.

The sixty-four-thousand-dollar question - actually the $1.5 billion question, since that's about what Tesco has invested in Fresh & Easy so far - about Philip Clarke's 10-day visit to the U.S. and his five days at Fresh & Easy Neighborhood Market's headquarters and in the stores is: What did he learn? And the logical follow on to the question is: Did what Philip Clarke learn make him feel more positive or less positive about Fresh & Easy's chances of breaking even by the end of Tesco's 2012/13 fiscal year? The 2012/13 fiscal year-end is a little over two years from now. Clark is one the record as saying Fresh & Easy will break-even by then.

It's really a rhetorical question though, as Philip Clarke is the only person who knows the actual answer to those two questions. And his answer, if asked such a set of questions, is rather predictable to me, as it should be - positive and affirmative.

But before he left Los Angeles to fly back to London on February 15, soon-to-be Tesco CEO Philip Clarke attended a "City Meeting" at Fresh & Easy Neighborhood Market's headquarters in El Segundo, California, not far from that Manhattan Beach store he visited and liked.

City Meetings, in Fresh & Easy-speak, are regular events in which the grocer brings in store management and others emplyees from various regions for an event/meeting in which all sorts of things are discussed, such as region and store performance, new company initiatives, new product introductions and the like. The meetings are colorful events. Fresh & Easy employees often dress up in outfits, tied to a particular theme, food is served, and various group activities and exercises are conducted. The meetings are designed to be informative - but also to be motivational and team building exercises.

As I mentioned in the beginning of my column, I can't personally speak to Philip Clarke's "imagination" vis-a-vis his trip to America and outlook about Fresh & Easy post-visit - nor can I speak to the two questions posed above except in the ways I have. All I can do is report what the soon-to-be Tesco CEO said before he departed for London from Los Angeles on February 15, 2011 after that City Meeting, which is: "Leaving LA for London after attending the city meeting at El Segundo - great trip, good insights and lots of ideas. Invigorating."

Tesco's current fiscal year ends on February 28, 2011. The retailer has said it expects to report a loss for its Fresh & Easy USA chain for the full fiscal year in the $250 -to- $259 million range, about the same loss as it reported in the prior fiscal year, despite adding considerable sales over the past fiscal year. In October Tesco reported a half-year loss for Fresh & Easy Neighborhood Market of $151 million. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market.]

But now the hard work begins for Clarke, who's most-challenging inheritance from outgoing CEO Terry Leahy is Fresh & Easy USA. Clarke must take the good insights, wealth of ideas and invigoration he picked up during his visit to America and Tesco's U.S. outpost and use his imagination and other skills to turn them into a plan, along with Tim Mason and his team at Fresh & Easy, that results in break-even for the fledgling Fresh & Easy chain by the end of Tesco's 2012/13 fiscal year, which is something Clarke no doubt assured the Tesco investors he spent time with on the first leg of his U.S. trip is going to happen - and happen on time. And that's a "fresh" task for Clarke and team that isn't going to be "easy" to achieve.

Stay tuned.

- The Insider

Related Stories

January 27, 2011: Incoming Tesco CEO Philip Clarke Names Expanded Corporate Executive Committee

October 8, 2010: 'The Insider' - Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA

October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market

October 4, 2010: Tuesday's Tesco Interim Report Offers A Road Map of Sorts For the Future of Fresh & Easy Neighborhood Market

September 13, 2010: 'The Insider' - Reading Philip Clarke's Tea Leaves: Might A Mixed Corporate/Franchise Model Be in Fresh & Easy Neighborhood Market's Future?

June 12, 2010: 'The Insider' - Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

June 8, 2010: Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

Read (click on the green link) past columns from 'The Insider' columnist at this link - The Insider.

Fresh & Easy Neighborhood Market Hits - and Passes - 100-Store Milestone in Southern California Today

Tesco's Fresh & Easy Neighborhood Market will open two new stores in Southern California this morning at 10 a.m., taking the fresh food and grocery chain to - and then over - the 100-store milestone in the Golden State's southland region.

The two new stores - at 655 East Bonita Avenue, in San Dimas, and 2249 Los Posas, in Camarillo - will mark the 100th and 101rst Fresh & Easy markets opened and operating for Tesco in Southern California.

After the stores open later this morning, Tesco will have 164 Fresh & Easy small-format fresh food and grocery stores operating in California, Nevada and Arizona.

The majority of the 164 Fresh & Easy stores, 115 units, are in California - the 101 stores in Southern California and seven stores each respectively in the Bakersfield and Fresno metro regions in the Central Valley - followed by 28 units in metropolitan Phoenix, Arizona, and 21 units in metro Las Vegas, Nevada.

Tesco opened its first Fresh & Easy stores in Southern California in November 2007, although the units in Hemet had a soft opening in October 2007.

On March 2, the grocer plans to open its first two stores in Northern California, something Tesco originally planned to begin doing in early 2009, but instead has postponed until next month because of the less than stellar performance of its Fresh & Easy Neighborhood Market chain to date. Tesco has lost over half a billion dollars on its operations of Fresh & Easy, and that doesn't include start up costs, since the first stores opened in November 2007.

But its 2011 and Tesco's Fresh & Easy is putting nearly all of its new store opening focus for the year in California. After tomorrow's openings, Fresh & Easy Neighborhood Market will have thus far opened nine new stores this year, all in Southern California. A tenth new store in the region, at Atlantic Avenue and 33rd Street in Long Beach, is set to open on March 30.

Additionally, as we've previously reported, Tesco's Fresh & Easy Neighborhood Market has 11 stores scheduled to open in March-April in Northern California, beginning with a store in San Jose and another unit in Danville, on March 2, 2011.

Related Stories

February 16, 2011: Fresh & Easy Neighborhood Market Celebrates Three-Store Opening Trifecta Today in Southern California.

February 14, 2011: First Look: Fresh & Easy Neighborhood Market Store in Northern California's Danville Set to Open on March 2

February 10, 2011: Tesco's Fresh & Easy Neighborhood Market Breaks Ground Today For Second Store in South Los Angeles

February 9, 2011: Tesco's Fresh & Easy Neighborhood Market Opens Three New Stores in Southern California Today

January 23, 2011: Tesco's Fresh & Easy Neighborhood Market Looking For Locations For New, Smaller-Format 4,000-to-5,000 Square-Foot Stores

January 14, 2011: Tesco 'Banking' on California in 2011 For Fresh & Easy Neighborhood Market USA

January 17, 2011: First Look at the Willow Glen-San Jose Fresh & Easy Neighborhood Market Store Set to Open March 2, 2011

December 10, 2010: Fresh & Easy Neighborhood Market CEO Tim Mason Says 70 New Stores Possible in Los Angeles Area

The Name Game: Satire Columnist Earl Grey Smells A 'Neighborhood-Express' Conspiracy Involving Tesco and Walmart

I'm neither a "Bilderberger," a "birther" or a "truther." Such simple, grand conspiracy theories aren't my cup of tea. I'm a member of the realist school, after all, and we don't make it a practice to brew up conspiracy theories to explain every little mystery that happens to come our way.

But I have to say, despite being a member of the realist school when it comes to politics, economics and corporate behavior, I'm beginning to see a hint of conspiracy - or at the very least a big dose of corporate incestuous behavior - when it comes to the naming of their respective smaller-format grocery stores by the two giants of global retailing - Walmart and Tesco

[Read - Related Story: February 22, 2011: Walmart Stores, Inc. Announces the Name For its New Smaller-Format Food & Grocery Stores: 'Walmart Express']

Although I hate to admit it as a realist, the evidence I've compiled below is nearly overwhelming that something more than mere coincidence or serendipity is going on in the chain/store naming departments at Tesco corporate headquarters in Cheshunt, Hertfordshire United Kingdom and at Walmart's corporate campus in Bentonville, Arkansas.

The corporate campuses of the two global retailing giants - Walmart is the number one retailer in the world and Tesco is the third-largest - may be separated by a vast ocean, or what those of us who still believe in the U.S.-UK special relationship like to instead call a "pond." But when it comes to naming their respective smaller-format stores, it's beginning to appear to me that Tesco and Walmart's chain/store naming gurus might just have each other's smart phone numbers on speed dial. How else to explain the empirical evidence I present below.

My 'theory of the case:' The name-game conspiracy

>In 1994 United Kingdom-based Tesco opened its first small-format, convenience-oriented food and grocery store in the United Kingdom, naming it "Tesco Express."

The stores are 3,000-5,000 square-feet in size. They feature a limited selection of fresh and packaged food and grocery items. Think of the format as a hybrid of a traditional American convenience store and a traditional U.S. smaller neighborhood grocery market in one. "Tesco Express" is the corporate inspiration behind Tesco's "Fresh & Easy Neighborhood Market" chain in the U.S.

>In 1998 Bentonville, Arkansas USA-based Walmart Stores, Inc. opened its first smaller-format food and grocery store, naming it "Walmart Neighborhood Market.

The "Walmart Neighborhood Market" format is a supermarket that averages 40,000 -to- 43,000 square-feet in size. The stores contain basically contain all of the food, grocery and non-foods items that a traditional supermarket of its size operated by grocers such as Safeway Stores, Kroger Co. and others do.

The format's positioning is mid-range: Low prices are a focus but not to the extent that hard-discount retailers like Aldi and Sav-A-Lot focus on price. The "Walmart Neighborhood Market" stores SKU selection is limited compared to some supermarkets of the same size. But it's more extensive than the item selections traditional offered by food retailers, regardless of square-footage, that position their respective formats as "limited assortment."

In recent years Walmart has taken its "Walmart Neighborhood Market" format and stores more upscale, in terms of both store design and quality of product offering.

A few years ago Walmart Stores also developed a smaller version, about 30,000 square-feet, of the fromat, which it calls "Neighborhood Market by Walmart." The test store of that format version is in Rodgers, Arkansas, near Walmart's corporate headquarters.

>In 2006 Tesco announced its plans to enter the United States with a chain of small-format (10,000-12,000 sqaure-foot) fresh food and grocery stores called "Fresh & Easy Neighborhood Market." The first Fresh & Easy stores opened in November 2007. Currently there are 162 Fresh & Easy Neighborhood Market stores in California, Nevada and Arizona.

"Fresh & Easy Neighborhood Market" wasn't Tesco's original name for the El Segundo, California-based chain however. Rather, before"Neighborhood Market," the chain's name was Fresh & Easy Community Market. Following some consumer research, however, which suggested a semantic preference for the word "neighborhood" over "community," Tesco decided to call its U.S. food and grocery chain "Fresh & Easy Neighborhood Market" rather than Fresh & Easy Community Market.

Of course, the fact Walmart has a chain of smaller-format (double the square-footage of the Fresh & Easy stores but small by Walmart standards) food and grocery stores in the U.S. called "Walmart Neighborhood Market" probably had no influence on Tesco's choice, right?

Walmart is the largest retailer, including of food and groceries, in the U.S. and the world. Tesco is the world's third largest seller of food and groceries, and general merchandise. Tesco is the number one retailer of food and groceries, and all else, in the United Kingdom, having a 31% market share, which is nearly as much as its two leading food and grocery retailing competitors, Walmart-owned ASDA and Sainsbury's.

>Today, on February 22, 2011, Walmart announced that the name of its newest smaller-format food and grocery-focused stores in the U.S., which will range from as small as 5,000 square-feet, up to about 30,000 square-feet, will be "Walmart Express."

Allow me to recap:

>Tesco: in 1994 names its small-format, convenience-oriented food and grocery stores in the UK: "Tesco Express."

>Walmart: In 2011 names its smaller-format food and grocery chain in the U.S.: "Walmart Express"

>Walmart: In 1994 names its smaller-to-medium format supermarkets in the U.S.: "Walmart Neighborhood Market."

>Tesco: In 2006 names its small-format U.S. food and grocery chain "Fresh & Easy Neighborhood Market."

Saying this is going to put me in bad graces with my fellow members of the realist school: But it appears to me something is rotten not just in Denmark but also in Cheshunt, Hertfordshire and Bentonville.

And if it isn't an "Express" and "Neighborhood"-focused name coining conspiracy that's being perpetrated by executives at the highest levels of Walmart and Tesco, then something even worse could be going on - a lack of creativity and originality.

For example, Walmart coins "Neighborhood Market" for its stores in America in 1994. Twelve years later Tesco plays the copycat, appropriating "Neighborhood Market" as half of its name for Fresh & Easy, and doing so right on Walmart's home turf, the United States. "Fresh & Easy Neighborhood Market" - indeed.

In 1994, Tesco coins "Express," as in "Tesco Express," which began in the UK but has now been expanded by the retailer to other parts of Europe." Today Walmart follows suit, becoming a fellow copycat, naming its new small-format chain and stores "Walmart Express." "Walmart Express" - indeed.

Perhaps the big, brawny retailer from Bentonville thinks it's being stealth; that nobody will notice its copycat behavior, since the U.S. and UK are separated by that pond I mentioned earlier. But since I divide my time between both sides of the pond, they aren't pulling anything over Earl Grey's eyes, despite the tea bag-sized bags I have under both of them.

Or perhaps "Walmart Express" its just payback by Walmart for Tesco's stealing "Neighborhood Market" five years ago? That's something my realist school friends would likely agree with.

However, I can't help but thinking there's more to this name game than mere coincidence, serendipity or even simple payback, in the case of Walmart's "Express" move today.

After all, we all know both Tesco and Walmart have offices full of creative people, including those in charge of both retailer's corporate departments of naming things.

But if I'm wrong and it isn't a naming conspiracy, then that means I must accept the realist school's explanation, which is that there appears to be a lack of creativity and originality at the top ranks in the naming things departments' at both Tesco and Walmart - along with at the CEO ranks at both companies, since the top guys have to approve the chain and store names - which is a proposition, realist or otherwise, that I just find difficult to fathom.

[Editor's Note: Earl Grey, who spent decades in a variety of positions in the tea industry in both the United Kingdom and United States, followed by a career as a journalist and writer, is Fresh & Easy's Buzz's sometime satire/humor correspondent. We call him that for two reasons: He only writes for the Fresh & Easy Buzz sometimes, and he's only occasionally humorous.]

[Click here to read Earl Grey's past columns in Fresh & Easy Buzz]

Walmart Stores, Inc. Announces the Name For its New Smaller-Format Food & Grocery Stores: 'Walmart Express'

Bill Simon, president and CEO of Walmart U.S., said today during a conference call in which Walmart Stores, Inc. reported its fiscal year 2011 fourth quarter financials, that the Bentonville, Arkansas-based global retailer has decided on a name for its new smaller-format food and grocery-focused stores. The name: "Walmart Express."

The "Walmart Express" name will be used for the smaller-format stores, which will range up to about 30,000 square-feet, which we've reported on and written about extensively in Fresh & Easy Buzz, in both urban and rural markets, Simon said today.

The head of Walmart's largest division, Walmart U.S., also said today that the first "Walmart Express" stores are set to open in the second quarter of this year, just a few months from now.

As we've previously reported, Walmart has secured numerous locations for the smaller-format, food and grocery-focused stores in California, including in both the southern and northern parts of the Golden State.

For example, in this January 10, 2011 story: Walmart 'Gets Real' With Smaller-Format Grocery Store Initiative in California; First Stores On Tap - we reported on specific locations Walmart has obtained in California for its smaller-format stores. We also reported in our piece that Walmart is preparing to open the first batch of its smaller-format stores soon, which Walmart U.S. president and CEO Bill Simon confirmed today, saying: "The development of our small format is progressing ahead of schedule. We expect to open our first 'Walmart Express' stores in the second quarter [of 2011]" [Also see - July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store; and September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010.]

Since publishing our story in early January, we've learned about and additional 10 locations in Southern California that Walmart Stores has acquired for its smaller-format stores. We've agreed with the Southern California commercial real estate source that provided the information to us not to list the locations of the stores just yet.

In addition to California, Walmart has acquired locations, has sites in the pipeline and has further plans to acquire locations for its "Walmart Express" smaller format stores throughout the U.S., including in major urban regions like Chicago, Washington D.C., New York and elsewhere.

Additionally, along with urban area, Walmart plans to open the smaller-format food and grocery stores in suburban and rural regions of the U.S., which is something we've previously reported, and that Bill Simon confirmed today.

Simon also said today that he and Walmart Stores, Inc. is disappointed with the sales performance of Walmart U.S. for the fourth quarter. "Our 1.8 percent comp decline for the fourth quarter didn’t meet anyone’s expectations. They certainly didn’t meet mine. Period," Simon said today.

Walmart Stores, Inc. reported a 1.8% decline in comparable store sales at Walmart U.S. for the 13-week period ended Jan. 28, 2011. On a slightly brighter note, comparable sales for Walmart's Sam's Club wholesale club division increased 2.7 percent, excluding fuel sales, for the same period.

Below is a summary of the financial metrics Walmart Stores, Inc. reported today for its fourth quarter:

• Walmart reported diluted earnings per share from continuing operations (reported EPS) of $1.41. This compares to $1.261 per share from continuing operations last year. Fourth quarter underlying diluted EPS from continuing operations was $1.342.
• Reported EPS from continuing operations for the fourth quarter included tax benefits of $243 million, or approximately $0.07 cents per share.
• Consolidated operating income for the fourth quarter was $8.0 billion, up 7.3 percent from last year.
• Net sales for the fourth quarter were $115.6 billion, an increase of 2.5 percent from last year.
• Walmart U.S. comparable store sales declined 1.8 percent in the 13-week period ended Jan. 28, 2011. Sam's Club comparable sales, without fuel, increased 2.7 percent for the same period.
• Full year reported EPS from continuing operations was $4.18, compared with last year's EPS of $3.731.
• Full year underlying diluted EPS from continuing operations was $4.072.
• Consolidated operating income for the full year was up 6.4 percent to $25.5 billion.
• Net sales for the full year were $419 billion,an increase of 3.4 percent.
• The company leveraged operating expenses for the quarter and the full year.
• Return on investment (ROI) for the fiscal year ended Jan. 31, 2011 remained strong and stable at 19.2² percent. Walmart ended the year with strong free cash flow of $10.92 billion.
• For the year, the company returned a record $19.2 billion to shareholders through dividends and share repurchases.

[You can view Walmart Stores, Inc.'s full financial release here. Click here to view the full-transcript of Walmart's Fourth Quarter Fiscal Year 2011 Earnings Call.]

Fresh & Easy Buzz will have additional news and analysis on Walmart's new "Walmart Express" smaller-format food and grocery store initiative upcoming soon. In the meantime...

Follow the story in Fresh & Easy Buzz: Walmart's New Smaller-Store Initiative

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September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010

September 23, 2010: Revisting 'marketside by Walmart': Format As We Know it On the Way Out But Some or All Of the Four Stores Could Be Converted

October 13, 2010: Simon Says: Walmart U.S. CEO Outlines Smaller Store Strategy and Plans; Walmart to Offer Groceries Online in USA

October 11, 2010: Walmart to Outline its Urban-Focused Smaller-Format Grocery Store Plans Wednesday; What Might Be In-Store?

October 12, 2010: 'The Insider': Live-Blogging Walmart Stores' 17th Annual Meeting For the Investment Community.

January 10, 2011: Walmart 'Gets Real' With Smaller-Format Grocery Store Initiative in California; First Stores On Tap

January 11, 2011: A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City

Readers: You can read additional stories about Walmart, including its smaller-format development at (by clicking on) the following links - 20K Neighborhood Market by Walmart prototye, California, Wal-Mart, Walmart, Walmart in California 2011, walmart small store strategy, Walmart Stores marketside by Walmart, Wal-Mart, Wal-Mart format innovation, Wal-Mart hybrid supercenters, Wal-Mart Marketside, Wal-Mart Modesto CA, Wal-Mart Supercenter, Wal-Mart's new Supercenter prototype, Walmart, marketside store brand, brand marketside, Walmart Stores Inc. Use the 'Older Posts' 'Newer Posts' links at the bottom of the linked pages for more pages/stories.