The Insider - Heard on the Street
Tesco's Fresh & Easy Neighborhood Market began terminating selected store-level employees, mostly but not exclusively regular grocery clerks called Customer Assistants, today at 33 of its 199 grocery markets in California, Nevada and Arizona.
I learned this while visiting a number of Fresh & Easy stores in two states yesterday and today.
I also verified it with a number of store-level Fresh & Easy Neighborhood Market employees, including two who were fired today.
In this July 26, 2012 piece, Fear and Loathing in El Segundo: Mass Firings, Reduction in Store Hours at 33 Fresh & Easy Stores ... and More, I reported exclusively that Fresh & Easy Neighborhood Market planned to reduce the operating hours at 33 of its stores from the retailer's normal 8 a.m.-10 p.m. hours to 9 a.m-8 pm, beginning soon.
That day is here: I also learned during my store visits yesterday and today that the reduced hours at the 33 stores are effective today. Instead of the previous 8 a.m.-10 p.m. operating hours, the doors to these 33 Fresh & Easy markets now officially open at 9 a.m, and close at 8 a.m.
I'm not aware of one grocery chain (read competitor to Tesco's Fresh & Easy) in California, Nevada and Arizona. In fact, many stores operated by the leading chains in the three states, such as Safeway, Kroger Co., Supervalu, Save Mart, Albertson's LLC, Stater Bros. and others, keep many of their respective stores open 24-hours. The stores not open 24-hours close generally at 11 p.m or midnight and open at 7 a.m.
Grocery stores that are doing well don't close at 8 p.m., unless they're doing so well that opening them any later would prove to be an embarrassment of riches to a modest grocery retailer. And grocers who want their stores to do well don't close them at 8 p.m.
Additionally, for those not experienced in the food and grocery retailing business, if a grocer decides to close a bunch of stores, like 33 of its 199 units, at 8 p.m. rather than the previous 10 p.m., you can take it to the bank the company CEO has very little if any faith in the future potential of those stores. If that's not the case, then he just doesn't understand the grocery business.
The selected store-level layoffs are a part of the reduction in hours program at the 33 Fresh & Easy stores.
Since the stores are opening one hour later and closing two hours earlier, less employees are needed.
Some of the workers at the affected stores are getting transfers to other Fresh & Easy markets.
Other employees at the 33 stores are getting their hours cut, in many cases down to 20 hours a week, which is the minimum they are required to work in order for the grocery chain to pay the 70-75% employer contribution for the workers health insurance policies.
Over the last five years of its operation (the first stores opened in November 2007) most Fresh & Easy Customer Assistants, who are hired part time and guaranteed 20 hours a week at the time of hire, have worked more than the minimum guaranteed hours at the request of either store management or themselves. Few employees have worked just 20 hours a week over the last five years Fresh &Easy has been in operation.
Cost-cutting strategy
The reduction in store operating hours and related reduction in store employee hours, along with the layoffs of the Customer Assistants and others I'm telling readers about today, is all about reducing labor and related costs for Tesco's Fresh & Easy.
The store-level cuts go hand-in-hand with the termination of about 50 employees in one day at Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, California, which I wrote about here on July 26.
Battles and wars
The cost-cutting comes now, in my analysis and opinion, because Tesco's fiscal half-year ends in about a month. Tesco must show its making at least a minimum reduction in its losses, $245 million for the most-recently-ended fiscal year (ended February 2012), when it reports its fiscal half-year results this fall.
Prior to making the cuts at its corporate headquarters in late July and the store-reductions I'm describing in this piece, Fresh & Easy Neighborhood Market was not on track to show any significant improvement in its half-year performance over the previous half-year, based on my reporting and analysis.
Since the cuts come so near the end of the half-year, I don't expect Tesco to report a major reduction in losses for the half-year in relation to the $245 million it lost in its most-recently ended fiscal year. It will be interesting to see - and more cuts are coming - what Tesco does report as a loss for Fresh & Easy for the half-year.
Breaking even with Fresh & Easy, which Tesco says it will do so by the end of its 2014 fiscal year, which is less than two years away, is only part of the story for Tesco - it's the battle but not the war. And it's the war that truly matters. Despite winning many battles a war can still be lost.
For Tesco, continuing my battle vs. war analogy, the war boils down to this question: Does Fresh & Easy have a future as a viable and profitable grocery chain?
That's a question I will be addressing in one of my next columns.
-The Insider
[Editor's Note: 'The Insider' isn't a literal or descriptiive title for our columnist. Fresh & Easy Buzz is an independent Blog, and is not affiliated with Tesco, Tesco's Fresh & Easy Neighborhood Market, or any of its competitors. No member of the Fresh & Easy Buzz editorial team has ever or currently works for Tesco or its Fresh & Easy Neighborhood Market chain.]
Showing posts with label store closings. Show all posts
Showing posts with label store closings. Show all posts
Wednesday, August 8, 2012
Thursday, July 26, 2012
Fear and Loathing in El Segundo: Mass Firings, Reduction in Store Hours at 33 Fresh & Easy Stores ... and More
The Insider - Heard On the Street
Regular followers (and if you aren't one, you should be) of our Fresh & Easy Buzz Twitter Feed are aware that for the last couple months we've been reporting there in real time on numerous interesting developments at Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, California - near-daily closed-door meetings in the offices of the CEO and retail operations chief, and the increasing use of interns to staff various positions, for example.
These developments, and two big ones announced to employees at yesterday's weekly staff meeting, are all about Tesco's struggle to stop the financial bleeding at now five-year-old Fresh & Easy, and its attempt to make good on the promise made by CEO Philip Clarke that the United Kingdom-based retailer will break even with Fresh & Easy Neighborhood Market by February 2014.
Clarke, a Tesco lifer (he started as a teenager stocking shelves) who became CEO of the global retailer in March 2011, said shortly after assuming the corner office from Terry Leahy that Tesco would break even with Fresh & Easy by February 2013. However, he added a year to his promise earlier this year, after Tesco reported a $249 million fiscal year loss at Fresh & Easy, which was a mere $4 million less than it lost on the grocery chain two years prior.
Mass Firings
Yesterday Fresh & Easy issued pink slips to between 40-50 employees at its corporate headquarters in El Segundo. The firings are designed to help Tesco cut its way to break-even with what former CEO Terry Leahy hoped and insisted (he still says it will be a success) would be the global retailer's American dream - Fresh & Easy.
But in the five years since Tesco launched Fresh & Easy it has invested around $2.3 billion and lost about $1.5 billion on the fresh food and grocery chain. The losses continue to the tune of nearly $5 million a week.
Tesco's original plan was to have at least 500-600 Fresh & Easy stores operating by now, on the way to 1,000 units in six to seven years from the November 2007 launch. Five years on there are 199 Fresh & Easy stores in California, Nevada and Arizona.
The firings yesterday were across the board rather than focused primarily on the real estate department as Tesco and Fresh & Easy's public relations representatives told various publications who reported it that way. There is a focus on real estate and construction but employees let go span the departments, from IT and operations to commercial.
Reducing Hours at 33 Stores
In a second attempt at cost-cutting - and this is the first time it's being reported anywhere - Fresh & Easy plans to reduce the store hours at 33 stores beginning soon. At present plans call for opening those stores at 9 a.m. instead of 8 a.m., and closing the poor-performing grocery markets at 8 p.m. instead of 10 p.m. Currently the standard hours for all stores is 8 a.m. (a few units open at 7 a.m.) to 10 p.m.
As part of this move, there will be some store-level firings and reductions in worker-hours at the 33 Fresh & Easy stores. Fresh & Easy Neighborhood Market, which hires all its store-level non-management workers on a part-time basis, has already been reducing hours of store employees chain-wide as part of its cost-reduction program designed to help it stop the bleeding at the fledgling grocery chain.
I'm also told by sources in positions to know such things that Fresh & Easy plans to cut some store-level jobs in existing units (besides the 33 stores) that have workers who came on board from the nearly 30 Fresh & Easy units that have been closed over the last couple years. Fresh & Easy absorbed these employees from the closed stores, which added to its labor costs.
And More
An additional move - what I call tinkering around the edges in terms of cost-cutting - Fresh & Easy also plans to eliminate the "Kitchen Table" food sampling stations in the few stores where they remain. (The grocery chain started a program to eliminate these stations in 2011 and replace them with mobile carts but still has some stores with the fixed food sampling kiosks.) The "Kitchen Table" fixed-kiosks are staffed full-time by an employee, hence their elimination in stores where they remain.
The headquarters firings have been a long time coming. Why? Not because the workers didn't do their jobs but because, as we've been saying regularly for years in the blog, the Fresh & Easy model and business just doesn't, in its present incarnation and management, have the legs to achieve break-even in any other way but by making massive operational expense cuts -- and that's what Tesco has essentially concluded. Fresh & Easy has also from the beginning been overloaded with senior and middle management for a chain its size.
Meanwhile, moral at Fresh & Easy's corporate office in El Segundo is lower than it's ever been, according to numerous employees who work there, despite whatever spin its CEO and public relations staff may put on it. I know of numerous employees there looking for new jobs. Some have even created a saying, "The interns are taking over," reflecting Fresh & Easy's growing use of the college students and recent graduates throughout the headquarters operation.
Moral is down at store-level as well. For example, I know of a group of top managers who, frustrated by Fresh & Easy senior managements inability to improve the chain's performance, have been meeting to talk about whether or not they have a future at the grocery chain.
Here's what one store manager told me today, in fact: "Having talked to many store managers today, the feelings are not good. Most of the talk is around what we should do. Stick it out or get out now? The consensus was it's time to start seriously looking. A few people are hoping to be bought by someone else."
The firings at corporate headquarters and other changes detailed in my piece are just the beginning at Tesco's Fresh & Easy. More cost-cutting is coming, as are other changes.
The cost-cutting is all about Tesco being able to show some progress in terms of reporting less of a loss (than last half year) for the upcoming fiscal half year. If it achieves that, Tesco can tell the many investment firm analysts who follow it, who will then report it to their investor-clients, that progress is being made. CEO Clarke needs this because it's crunch time - he can't remain credible if he were to change the break-even date for Fresh & Easy once again, say to February 2015 instead of February 2014, for example.
But CEO's are supposed to be big picture, policy guys - that vision thing, as former U.S. President George H.W. Bush liked to call it - not bean counters. Therefore, Philip Clarke should be asking himself one central question, which is: 'What is my vision for Fresh & Easy Neighborhood Market in America and how can Tesco achieve it?' But what, in my opinion, Clarke is probably asking himself is this: 'Can I get Fresh & Easy to break-even by February 2014, as I've publicly said I would, and then find a buyer for it?'
-The Insider
[Editor's Note: Fresh & Easy Buzz is an independent Blog, and is not affiliated with Tesco, Tesco's Fresh & Easy Neighborhood Market, or any of its competitors. No member of the Fresh & Easy Buzz editorial team has ever or currently works for Tesco or its Fresh & Easy Neighborhood Market chain.]
Regular followers (and if you aren't one, you should be) of our Fresh & Easy Buzz Twitter Feed are aware that for the last couple months we've been reporting there in real time on numerous interesting developments at Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, California - near-daily closed-door meetings in the offices of the CEO and retail operations chief, and the increasing use of interns to staff various positions, for example.
These developments, and two big ones announced to employees at yesterday's weekly staff meeting, are all about Tesco's struggle to stop the financial bleeding at now five-year-old Fresh & Easy, and its attempt to make good on the promise made by CEO Philip Clarke that the United Kingdom-based retailer will break even with Fresh & Easy Neighborhood Market by February 2014.
Clarke, a Tesco lifer (he started as a teenager stocking shelves) who became CEO of the global retailer in March 2011, said shortly after assuming the corner office from Terry Leahy that Tesco would break even with Fresh & Easy by February 2013. However, he added a year to his promise earlier this year, after Tesco reported a $249 million fiscal year loss at Fresh & Easy, which was a mere $4 million less than it lost on the grocery chain two years prior.
Mass Firings
Yesterday Fresh & Easy issued pink slips to between 40-50 employees at its corporate headquarters in El Segundo. The firings are designed to help Tesco cut its way to break-even with what former CEO Terry Leahy hoped and insisted (he still says it will be a success) would be the global retailer's American dream - Fresh & Easy.
But in the five years since Tesco launched Fresh & Easy it has invested around $2.3 billion and lost about $1.5 billion on the fresh food and grocery chain. The losses continue to the tune of nearly $5 million a week.
Tesco's original plan was to have at least 500-600 Fresh & Easy stores operating by now, on the way to 1,000 units in six to seven years from the November 2007 launch. Five years on there are 199 Fresh & Easy stores in California, Nevada and Arizona.
The firings yesterday were across the board rather than focused primarily on the real estate department as Tesco and Fresh & Easy's public relations representatives told various publications who reported it that way. There is a focus on real estate and construction but employees let go span the departments, from IT and operations to commercial.
Reducing Hours at 33 Stores
In a second attempt at cost-cutting - and this is the first time it's being reported anywhere - Fresh & Easy plans to reduce the store hours at 33 stores beginning soon. At present plans call for opening those stores at 9 a.m. instead of 8 a.m., and closing the poor-performing grocery markets at 8 p.m. instead of 10 p.m. Currently the standard hours for all stores is 8 a.m. (a few units open at 7 a.m.) to 10 p.m.
As part of this move, there will be some store-level firings and reductions in worker-hours at the 33 Fresh & Easy stores. Fresh & Easy Neighborhood Market, which hires all its store-level non-management workers on a part-time basis, has already been reducing hours of store employees chain-wide as part of its cost-reduction program designed to help it stop the bleeding at the fledgling grocery chain.
I'm also told by sources in positions to know such things that Fresh & Easy plans to cut some store-level jobs in existing units (besides the 33 stores) that have workers who came on board from the nearly 30 Fresh & Easy units that have been closed over the last couple years. Fresh & Easy absorbed these employees from the closed stores, which added to its labor costs.
And More
An additional move - what I call tinkering around the edges in terms of cost-cutting - Fresh & Easy also plans to eliminate the "Kitchen Table" food sampling stations in the few stores where they remain. (The grocery chain started a program to eliminate these stations in 2011 and replace them with mobile carts but still has some stores with the fixed food sampling kiosks.) The "Kitchen Table" fixed-kiosks are staffed full-time by an employee, hence their elimination in stores where they remain.
The headquarters firings have been a long time coming. Why? Not because the workers didn't do their jobs but because, as we've been saying regularly for years in the blog, the Fresh & Easy model and business just doesn't, in its present incarnation and management, have the legs to achieve break-even in any other way but by making massive operational expense cuts -- and that's what Tesco has essentially concluded. Fresh & Easy has also from the beginning been overloaded with senior and middle management for a chain its size.
Meanwhile, moral at Fresh & Easy's corporate office in El Segundo is lower than it's ever been, according to numerous employees who work there, despite whatever spin its CEO and public relations staff may put on it. I know of numerous employees there looking for new jobs. Some have even created a saying, "The interns are taking over," reflecting Fresh & Easy's growing use of the college students and recent graduates throughout the headquarters operation.
Moral is down at store-level as well. For example, I know of a group of top managers who, frustrated by Fresh & Easy senior managements inability to improve the chain's performance, have been meeting to talk about whether or not they have a future at the grocery chain.
Here's what one store manager told me today, in fact: "Having talked to many store managers today, the feelings are not good. Most of the talk is around what we should do. Stick it out or get out now? The consensus was it's time to start seriously looking. A few people are hoping to be bought by someone else."
The firings at corporate headquarters and other changes detailed in my piece are just the beginning at Tesco's Fresh & Easy. More cost-cutting is coming, as are other changes.
The cost-cutting is all about Tesco being able to show some progress in terms of reporting less of a loss (than last half year) for the upcoming fiscal half year. If it achieves that, Tesco can tell the many investment firm analysts who follow it, who will then report it to their investor-clients, that progress is being made. CEO Clarke needs this because it's crunch time - he can't remain credible if he were to change the break-even date for Fresh & Easy once again, say to February 2015 instead of February 2014, for example.
But CEO's are supposed to be big picture, policy guys - that vision thing, as former U.S. President George H.W. Bush liked to call it - not bean counters. Therefore, Philip Clarke should be asking himself one central question, which is: 'What is my vision for Fresh & Easy Neighborhood Market in America and how can Tesco achieve it?' But what, in my opinion, Clarke is probably asking himself is this: 'Can I get Fresh & Easy to break-even by February 2014, as I've publicly said I would, and then find a buyer for it?'
-The Insider
[Editor's Note: Fresh & Easy Buzz is an independent Blog, and is not affiliated with Tesco, Tesco's Fresh & Easy Neighborhood Market, or any of its competitors. No member of the Fresh & Easy Buzz editorial team has ever or currently works for Tesco or its Fresh & Easy Neighborhood Market chain.]
Monday, January 9, 2012
Exclusive: Tesco's Fresh & Easy Closing 12 Stores; We Have the Locations
Breaking Buzz
Yesterday we broke the news that Tesco will close up to 12 of its 184 Fresh & Easy Neighborhood Market grocery stores in California, Nevada and Arizona. [Read the story here - January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores.]
Today we can report that Tesco's Fresh & Easy Neighborhood Market plans to close 12 underperforming stores - seven units in California, four grocery markets in metro Phoenix, Arizona and one store in metro Las Vegas, Nevada.
Below are the addresses of the 12 Fresh & Easy stores to be closed:
California
>Fresno: Cedar and Shields
>Bakersfield: H and Planz
>Hemet: Florida and Lyon
>Anaheim: Lincoln and Western
>Baldwin Park: Francisquito and Puente
>Fountain Valley: Harbor and Edinger
>Ontario: Riverside and Archibald
All the stores, except for the Fresno and Bakersfield locations, which are in the Central Valley, are in Southern California
Arizona
>Phoenix: 7th Street and Thunderbird
>Phoenix: 19th Avenue and Glendale
>Phoenix: Camelback Road and 83rd Avenue
>Phoenix: 32nd Street and Greenway
Nevada
>Las Vegas: Ann and Decatur
The store closures were announced to employees of Fresh & Easy Neighborhood Market by CEO Tim Mason today.
In making the announcement Mason said this: " Like any retailer, we are always evaluating our store portfolio and we have decided to temporarily close twelve underperforming stores. At this time, there is simply not enough growth in sales and customers to keep these stores open. Many have been open for several years and are trading in areas where the network of Fresh & Easy stores will be able to absorb most of the existing customer base. We have taken significant steps to minimize the impact these temporary closures will have on you, including making sure we are able to offer all impacted employees a position at another nearby store."
As you can see in the paragraph above, Mason calls the store closures "temporary." He used that word because Fresh & Easy plans to "mothball" the 12 stores like it did with the 13 units it closed in November 2010. All 13 of those stores remain closed and are vacant.
Mason also told employees in today's announcement that although the retailer is closing the 12 stores, Fresh & Easy plans to "open more than two dozen through March, including seven new Fresh & Easy Express stores in Los Angeles and Orange counties and our first five stores in the Sacramento market."
The first batch of those two dozen-plus new stores are set to open on Wednesday.
Neither Tesco or its Fresh & Easy Neighborhood Market chain has publicly announced the closure of the 12 stores listed above.
Tesco has now closed 25 Fresh & Easy stores since it launched its El Segundo, California-based small-format fresh food and grocery chain in November 2007, when the first batch of stores were opened.
Six of the 13 Fresh & Easy stores Tesco closed in November 2010 were in metro Phoenix, Arizona and metro Las Vegas, Nevada respectively. One store was in Southern California.
With the closing of the four Fresh & Easy units in Phoenix, Tesco will have just 24 stores in Arizona, down from a high of 34 units in October 2010, before the six stores were closed in November of that year.
There are currently 135 Fresh 7 Easy stores in California. Closing the seven stores will reduce the grocer's store count in the state to 128 units, but only until Wednesday when Fresh & Easy Neighborhood Market will begin opening the first batch of what will be a couple dozen new stores in California over the next few months. See our exclusive list of those stores here.
The closing of the single store in Las Vegas, at Ann and Decatur, will give Fresh & Easy Neighborhood Market 20 units in Nevada, down from the current 21 stores. The retailer plans to open a couple new stores in the metro Las Vegas region this year, so that store count number will rise once those units open.
Fresh & Easy Neighborhood Market didn't open any new stores in Arizona or Nevada in calendar year 2011, although it has a number of locations in both states it's been sitting on in both states for a considerable amount of time. Instead, all 29 of the new stores it opened in 2011 are in California, which is where all but a handful of the new stores set to be opened in 2012 will be located.
We'll be offering some analysis on the latest round of Fresh & Easy store closings in an upcoming piece. Stay tuned.
Related Stories
January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores
December 26, 2011: Solid Performance Gives Tesco 'Fresh & Easy' Wiggle Room - But CEO Clarke Shouldn't Sleep Soundly Every Night
December 8, 2011: Tesco Reports 11.9% Q3 Comp Store Sales Gain for Fresh & Easy ... But On Heavy Discounting
November 10, 2011: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market
October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol
November 2, 2010: Closure of 13 Stores Brings Fresh & Easy Neighborhood Market's Store-Count to 155 Units
October 24, 2010: Tesco's Fresh & Easy Neighborhood Market On Track to Close 13 Stores By November 2, 2010
October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market
Yesterday we broke the news that Tesco will close up to 12 of its 184 Fresh & Easy Neighborhood Market grocery stores in California, Nevada and Arizona. [Read the story here - January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores.]
Today we can report that Tesco's Fresh & Easy Neighborhood Market plans to close 12 underperforming stores - seven units in California, four grocery markets in metro Phoenix, Arizona and one store in metro Las Vegas, Nevada.
Below are the addresses of the 12 Fresh & Easy stores to be closed:
California
>Fresno: Cedar and Shields
>Bakersfield: H and Planz
>Hemet: Florida and Lyon
>Anaheim: Lincoln and Western
>Baldwin Park: Francisquito and Puente
>Fountain Valley: Harbor and Edinger
>Ontario: Riverside and Archibald
All the stores, except for the Fresno and Bakersfield locations, which are in the Central Valley, are in Southern California
Arizona
>Phoenix: 7th Street and Thunderbird
>Phoenix: 19th Avenue and Glendale
>Phoenix: Camelback Road and 83rd Avenue
>Phoenix: 32nd Street and Greenway
Nevada
>Las Vegas: Ann and Decatur
The store closures were announced to employees of Fresh & Easy Neighborhood Market by CEO Tim Mason today.
In making the announcement Mason said this: " Like any retailer, we are always evaluating our store portfolio and we have decided to temporarily close twelve underperforming stores. At this time, there is simply not enough growth in sales and customers to keep these stores open. Many have been open for several years and are trading in areas where the network of Fresh & Easy stores will be able to absorb most of the existing customer base. We have taken significant steps to minimize the impact these temporary closures will have on you, including making sure we are able to offer all impacted employees a position at another nearby store."
As you can see in the paragraph above, Mason calls the store closures "temporary." He used that word because Fresh & Easy plans to "mothball" the 12 stores like it did with the 13 units it closed in November 2010. All 13 of those stores remain closed and are vacant.
Mason also told employees in today's announcement that although the retailer is closing the 12 stores, Fresh & Easy plans to "open more than two dozen through March, including seven new Fresh & Easy Express stores in Los Angeles and Orange counties and our first five stores in the Sacramento market."
The first batch of those two dozen-plus new stores are set to open on Wednesday.
Neither Tesco or its Fresh & Easy Neighborhood Market chain has publicly announced the closure of the 12 stores listed above.
Tesco has now closed 25 Fresh & Easy stores since it launched its El Segundo, California-based small-format fresh food and grocery chain in November 2007, when the first batch of stores were opened.
Six of the 13 Fresh & Easy stores Tesco closed in November 2010 were in metro Phoenix, Arizona and metro Las Vegas, Nevada respectively. One store was in Southern California.
With the closing of the four Fresh & Easy units in Phoenix, Tesco will have just 24 stores in Arizona, down from a high of 34 units in October 2010, before the six stores were closed in November of that year.
There are currently 135 Fresh 7 Easy stores in California. Closing the seven stores will reduce the grocer's store count in the state to 128 units, but only until Wednesday when Fresh & Easy Neighborhood Market will begin opening the first batch of what will be a couple dozen new stores in California over the next few months. See our exclusive list of those stores here.
The closing of the single store in Las Vegas, at Ann and Decatur, will give Fresh & Easy Neighborhood Market 20 units in Nevada, down from the current 21 stores. The retailer plans to open a couple new stores in the metro Las Vegas region this year, so that store count number will rise once those units open.
Fresh & Easy Neighborhood Market didn't open any new stores in Arizona or Nevada in calendar year 2011, although it has a number of locations in both states it's been sitting on in both states for a considerable amount of time. Instead, all 29 of the new stores it opened in 2011 are in California, which is where all but a handful of the new stores set to be opened in 2012 will be located.
We'll be offering some analysis on the latest round of Fresh & Easy store closings in an upcoming piece. Stay tuned.
Related Stories
January 8, 2012: Tesco to Close Up to 12 Fresh & Easy Stores
December 26, 2011: Solid Performance Gives Tesco 'Fresh & Easy' Wiggle Room - But CEO Clarke Shouldn't Sleep Soundly Every Night
December 8, 2011: Tesco Reports 11.9% Q3 Comp Store Sales Gain for Fresh & Easy ... But On Heavy Discounting
November 10, 2011: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market
October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol
November 2, 2010: Closure of 13 Stores Brings Fresh & Easy Neighborhood Market's Store-Count to 155 Units
October 24, 2010: Tesco's Fresh & Easy Neighborhood Market On Track to Close 13 Stores By November 2, 2010
October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market
Sunday, January 8, 2012
Tesco to Close Up to 12 Fresh & Easy Stores
Breaking Buzz
Tesco plans to close up to 12 underperforming Fresh & Easy stores as part of its strategy to break even financially with its fledgling Southern California-based fresh food and grocery chain by the end of its 2012/13 fiscal year, which begins in late February and runs through February 2013, Fresh & Easy Buzz has learned.
El Segundo, California-based Fresh & Easy Neighborhood Market could announce the latest round of store closures as early as Wednesday, January 11, according to our sources.
The store closure announcement could come as early as Wednesday because Tesco is opening a number of new Fresh & Easy stores, its first for the new year, on January 11. Timing the store closure announcement on the same day a number of new stores are being opened could serve to blunt some of the justifiably negative press that will come from the announcement, according to the thinking of some at Fresh & Easy Neighborhood Market, our sources tell us.
From a public relations perspective such spin could go something like this: 'Yes we are closing some stores but we also opened numerous new stores today,' followed by a comment or two on the continuing poor economy in the places where the stores are being closed, or something similar.
Fresh & Easy Buzz is the first publication to report this development. Neither Tesco or its Fresh & Easy chain have announced any plans to close any stores.
There are currently 184 Fresh & Easy stores in California (135 units), Nevada (21 units) and Arizona (28 units).
Tesco closed 13 underperforming Fresh & Easy grocery markets in November 2010 - six units each in Nevada and Arizona and one store in Southern California. Fresh & Easy's CEO, Tim Mason, said at the time the stores would be "mothballed," and possibly re-opened in the future. The grocer still holds the leases on the 13 closed stores. See here and here for details.
If Tesco closes all 12 underperforming Fresh & Easy units currently under consideration, which our sources tell us is probable, that will make for 23 Fresh & Easy stores it's closed since launching the Southern California-based chain in November 2007.
Additionally, Tesco has held back from opening numerous Fresh & Easy locations, some of which has been sitting in various states of completion since 2008-2009. These includes store sites in Arizona, Nevada and California.
That Tesco will close more Fresh & Easy stores comes as no surprise to Fresh & Easy Buzz, since we said in the blog in 2011 that it is one of the things the United Kingdom-based retailer will have to do if it hopes to come close to breaking even with Fresh & Easy over the next 14 months.
This year is a crucial one for Tesco with Fresh & Easy because for all practical purposes it has until the end of December to get to break-even with Fresh & Easy Neighborhood Market because the month of January and partial month of February 2013, when the 2012/13 fiscal year ends, is insignificant. If it doesn't happen by Christmas 2012, it isn't going to happen at all because the month of January 2013 and a few weeks in February aren't enough to make a difference, in our analysis.
Because 2012 is a "make or break" year for Tesco with Fresh & Easy, expect to see other significant changes being made, in addition to the latest round of store closures.
On October 5, 2011 Tesco reported a fiscal half-year loss for Fresh & Easy of $112 million on sales of $470 million. The second-half fiscal year began at the end of August 2011 and runs until the end of February 2012. Tesco will report how much it lost on Fresh & Easy for its full fiscal 2011/12 year in April.
The half-year loss amount is 23% less than Tesco lost on Fresh & Easy in the same period the year before. However, there's no guarantee this trend will continue into the second half of the fiscal year.
Tesco plans to open numerous new Fresh & Easy stores this year. Opening new stores requires start up expenses and adds to labor costs. Sales from new stores lag behind paying for those start up and new labor costs, which makes breaking even with Fresh & Easy while opening numerous new stores an even more difficult task for Tesco.
Related Stories
December 26, 2011: Solid Performance Gives Tesco 'Fresh & Easy' Wiggle Room - But CEO Clarke Shouldn't Sleep Soundly Every Night
December 8, 2011: Tesco Reports 11.9% Q3 Comp Store Sales Gain for Fresh & Easy ... But On Heavy Discounting
November 10, 2011: Chief Marketing Officer Uwins Out in Top-Level Reshuffling at Tesco's Fresh & Easy Neighborhood Market
October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol
November 2, 2010: Closure of 13 Stores Brings Fresh & Easy Neighborhood Market's Store-Count to 155 Units
October 24, 2010: Tesco's Fresh & Easy Neighborhood Market On Track to Close 13 Stores By November 2, 2010
October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market
Thursday, April 23, 2009
Competitor News: Arizona's White Hot Competitive Climate Plus the Recession Leads Bashas' to Close More Stores; Layoff 700 More Employees
Arizona Region Market Report
Arizona's family-owned Bashas' Markets supermarket chain announced today it plans to close additional stores in the state, along with laying off more employees.
Through its spokesperson Kristi Nied the 160-store hometown Bashas' chain said it will close five to ten underperforming stores in Arizona under its flagship Bashas' banner and its Food City Latino format banner. Three or more of the stores will be in the Metropolitan Phoenix region where Tesco's Fresh & Easy has 30 of its small-format, Fresh & Easy grocery and fresh foods markets.
Bashas' also says it will eliminate about 700 jobs. The number of layoffs could exceed the 700 by at least a couple more hundred if Bashas' ends up closing close to or the full 10 stores, a source in a position to know told us today.
The 700 eliminated jobs comes on the heels of the grocery chain laying off about 350 employees in late January of this year, as we reported and wrote about in this February 6, 2009 news and analysis piece: Arizona Market Region Analysis: Bashas' Worker Layoffs, Closing of Stores Could be the 'Canary in the Coal Mine' in Ultra-Competitive Arizona Market.
Additionally, in the summer of 2008, Bashas' laid off about 250 employees in what then was its very first round of worker firings, which it attributed to the severity of the economic recession in Arizona, along with the intense competition in the food and grocery retailing sector in the state. [June 8, 2008: June 8, 2008: Arizona Region Market Report: First Signs of A Weakening Might Be Starting to Show in the 'White-Hot,' 'Super-Competitive' Arizona Market.]
As we wrote about in this April 1, 2009 story [Competitor News: Bashas' Chain Launching 10,000-Plus Item Storewide Price Slashing Program This Week in its Arizona Supermarkets], Bashas' fired a competitive salvo in its home market of Arizona by slashing the prices on over 10,000 items in its 150-plus stores in the state.
Bashas' operates 150-plus stores in Arizona, where it is headquartered, under its flagship Bashas' banner (the majority of stores); Food City, its Latino-focused format banner; A.J.'s Fine Foods, an upscale and specialty banner; Eddie's Country Store; and Bashas' Dine (prepared foods focus). Bashas' also operates a small chain of liquor stores in Arizona called Sportsman's Fine Wine & Spirits.
The firing of the 700 employees announced today by Bashas' is its third since the summer of 2008. It appears that competition is such for the grocer that in addition to launching is price-slashing and promotional program just a few weeks ago, it still needs to cut costs on the expense side of the ledger, closing the five to 10 stores and laying off the 700 employees.
Since Fresh & Easy Buzz was saying nearly a year ago, like in this story, [June 8, 2008: Arizona Region Market Report: First Signs of A Weakening Might Be Starting to Show in the 'White-Hot,' 'Super-Competitive' Arizona Market], that something would have to give among one or more chains in Arizona in terms of what we call the white hot competitive food and grocery market in the state, coupled with the recession and housing foreclosure crisis, both which have hit the state particularly hard, we aren't surprised Bashas' is closing additional stores and laying off more employees. Although the 700 employees is more than we anticipated, on top of the about 500 already let go since the summer of 2008.
Unlike Wal-Mart, Safeway, Kroger's Fry's, and even Tesco's Fresh & Easy, all players in the Arizona market and all owned by public companies that are among the largest retailers in the world, Bashas' is a privately-held company that has all but just a few of its stores in Arizona. As a result, it doesn't have the kind of capital these publicly-held mega-retailers do to buffer it in the current super-competitive and economically-challenged climate in Arizona, particularly since the credit and financial crisis is far from over.
In addition, since all but a few of Bashas' stores are in Arizona, it doesn't have a significant presence in other states, like all the others do, that can offset its Arizona business. In other words, all of Bashas' food retailing eggs are basically in the Arizona basket, even though it is a multi-format operator in the state, which is a plus for the retailer despite its problems.
More will give, and more shoes will fall, in the Arizona market. The competition continues to heat up. The economy is far from improving as of yet in the state. And population growth, which has been the key to Arizona's, particularly the Phoenix Metro region's, pre-recession booming economy, is pretty much at a standstill.
Linkage - Select Related Posts:
>December 16, 2008: Food & Grocery Retailing in the Recession: Bashas' Broadening the Shopper-Base in its Hispanic Format Food City Stores; Shoppers Search for Value
>February 6, 2009: Arizona Market Region Analysis: Bashas' Worker Layoffs, Closing of Stores Could be the 'Canary in the Coal Mine' in Ultra-Competitive Arizona Market
>February 3, 2009: Competitor News: 'Grocer-Gone-Wild:' Arizona's Fry's and its 'Bring it On' 'Take All Competitors' (Including Tesco's Fresh & Easy) Store Coupon Move
>December 12, 2008: Fresh & Easy Looking For Gold in Gilbert: Second Store in the Arizona City Set to Open Jan. 7; A Third Fresh & Easy Market to Open In Fall, 2009
>December 12, 2008: Marketing & Promotions Report: Manufacturers' Coupons Becoming the 'New Black;' Use Among Consumers Soaring; Marketers Distributing More Than Before
>October 2, 2008: Arizona Market Report: Fresh & Easy Opens Two New Stores; Marketside Opens in Three Days; Analysis of One Of the Most Competitive Markets in the U.S.
>June 8, 2008: Arizona Region Market Report: First Signs of A Weakening Might Be Starting to Show in the 'White-Hot,' 'Super-Competitive' Arizona Market
>April 9, 2008: Arizona's Shopper and Employee-Beloved Bashas' Named One of 'The Best' Places to Work in the State For Second Year in a Row
[Follow Fresh & Easy Buzz around on Twitter.com at www.twitter.com/freshneasybuzz.]
Arizona's family-owned Bashas' Markets supermarket chain announced today it plans to close additional stores in the state, along with laying off more employees.
Through its spokesperson Kristi Nied the 160-store hometown Bashas' chain said it will close five to ten underperforming stores in Arizona under its flagship Bashas' banner and its Food City Latino format banner. Three or more of the stores will be in the Metropolitan Phoenix region where Tesco's Fresh & Easy has 30 of its small-format, Fresh & Easy grocery and fresh foods markets.
Bashas' also says it will eliminate about 700 jobs. The number of layoffs could exceed the 700 by at least a couple more hundred if Bashas' ends up closing close to or the full 10 stores, a source in a position to know told us today.
The 700 eliminated jobs comes on the heels of the grocery chain laying off about 350 employees in late January of this year, as we reported and wrote about in this February 6, 2009 news and analysis piece: Arizona Market Region Analysis: Bashas' Worker Layoffs, Closing of Stores Could be the 'Canary in the Coal Mine' in Ultra-Competitive Arizona Market.
Additionally, in the summer of 2008, Bashas' laid off about 250 employees in what then was its very first round of worker firings, which it attributed to the severity of the economic recession in Arizona, along with the intense competition in the food and grocery retailing sector in the state. [June 8, 2008: June 8, 2008: Arizona Region Market Report: First Signs of A Weakening Might Be Starting to Show in the 'White-Hot,' 'Super-Competitive' Arizona Market.]
As we wrote about in this April 1, 2009 story [Competitor News: Bashas' Chain Launching 10,000-Plus Item Storewide Price Slashing Program This Week in its Arizona Supermarkets], Bashas' fired a competitive salvo in its home market of Arizona by slashing the prices on over 10,000 items in its 150-plus stores in the state.
Bashas' operates 150-plus stores in Arizona, where it is headquartered, under its flagship Bashas' banner (the majority of stores); Food City, its Latino-focused format banner; A.J.'s Fine Foods, an upscale and specialty banner; Eddie's Country Store; and Bashas' Dine (prepared foods focus). Bashas' also operates a small chain of liquor stores in Arizona called Sportsman's Fine Wine & Spirits.
The firing of the 700 employees announced today by Bashas' is its third since the summer of 2008. It appears that competition is such for the grocer that in addition to launching is price-slashing and promotional program just a few weeks ago, it still needs to cut costs on the expense side of the ledger, closing the five to 10 stores and laying off the 700 employees.
Since Fresh & Easy Buzz was saying nearly a year ago, like in this story, [June 8, 2008: Arizona Region Market Report: First Signs of A Weakening Might Be Starting to Show in the 'White-Hot,' 'Super-Competitive' Arizona Market], that something would have to give among one or more chains in Arizona in terms of what we call the white hot competitive food and grocery market in the state, coupled with the recession and housing foreclosure crisis, both which have hit the state particularly hard, we aren't surprised Bashas' is closing additional stores and laying off more employees. Although the 700 employees is more than we anticipated, on top of the about 500 already let go since the summer of 2008.
Unlike Wal-Mart, Safeway, Kroger's Fry's, and even Tesco's Fresh & Easy, all players in the Arizona market and all owned by public companies that are among the largest retailers in the world, Bashas' is a privately-held company that has all but just a few of its stores in Arizona. As a result, it doesn't have the kind of capital these publicly-held mega-retailers do to buffer it in the current super-competitive and economically-challenged climate in Arizona, particularly since the credit and financial crisis is far from over.
In addition, since all but a few of Bashas' stores are in Arizona, it doesn't have a significant presence in other states, like all the others do, that can offset its Arizona business. In other words, all of Bashas' food retailing eggs are basically in the Arizona basket, even though it is a multi-format operator in the state, which is a plus for the retailer despite its problems.
More will give, and more shoes will fall, in the Arizona market. The competition continues to heat up. The economy is far from improving as of yet in the state. And population growth, which has been the key to Arizona's, particularly the Phoenix Metro region's, pre-recession booming economy, is pretty much at a standstill.
Linkage - Select Related Posts:
>December 16, 2008: Food & Grocery Retailing in the Recession: Bashas' Broadening the Shopper-Base in its Hispanic Format Food City Stores; Shoppers Search for Value
>February 6, 2009: Arizona Market Region Analysis: Bashas' Worker Layoffs, Closing of Stores Could be the 'Canary in the Coal Mine' in Ultra-Competitive Arizona Market
>February 3, 2009: Competitor News: 'Grocer-Gone-Wild:' Arizona's Fry's and its 'Bring it On' 'Take All Competitors' (Including Tesco's Fresh & Easy) Store Coupon Move
>December 12, 2008: Fresh & Easy Looking For Gold in Gilbert: Second Store in the Arizona City Set to Open Jan. 7; A Third Fresh & Easy Market to Open In Fall, 2009
>December 12, 2008: Marketing & Promotions Report: Manufacturers' Coupons Becoming the 'New Black;' Use Among Consumers Soaring; Marketers Distributing More Than Before
>October 2, 2008: Arizona Market Report: Fresh & Easy Opens Two New Stores; Marketside Opens in Three Days; Analysis of One Of the Most Competitive Markets in the U.S.
>June 8, 2008: Arizona Region Market Report: First Signs of A Weakening Might Be Starting to Show in the 'White-Hot,' 'Super-Competitive' Arizona Market
>April 9, 2008: Arizona's Shopper and Employee-Beloved Bashas' Named One of 'The Best' Places to Work in the State For Second Year in a Row
[Follow Fresh & Easy Buzz around on Twitter.com at www.twitter.com/freshneasybuzz.]
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