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Tesco grocery expansion on hold

BY Doug Desjardins

RIVERSIDE, Calif. —Tesco this month put a three-month hold on new store openings to assess the performance of its Fresh & Easy Neighborhood Markets. The chain said the move was preplanned, but it raised questions about how its concept store is faring with U.S. shoppers.

Tesco said its April 8 store opening in Arizona would be its last until July. In the meantime, it plans to make changes to address unspecified issues in stores.

“We’ve given ourselves a little time to kick the tires, smooth out any wrinkles and make some improvements that customers have asked for,” said Tesco U.S. marketing director Simon Uwins. “Quite simply, it’s to allow the business we’ve created time to settle down.”

He said Tesco opened 31 stores during a 66-day period earlier this year, in what he described as “an opening program on steroids.” Tesco has opened 61 stores since its November 2007 debut in California, Arizona and Nevada, and plans to have 200 stores by February 2009.

Tesco spokesman Brendan Wonnacott said its current hold on new openings was part of its original plan and that its expansion plans are on track. “Before we even opened our first store, we left a period of time open where we would stop expanding and assess the business,” Wonnacott said.

Tesco’s stores don’t have pharmacies and stock a small selection of OTC products. In January, Tesco agreed to take over 10 former Rite Aid locations in Las Vegas and will convert the stores later this year. But they’ll be standard Fresh & Easy outlets, and Wonnacott said Tesco has no plans to get into the pharmacy business.

The three-month break has raised questions about the health of Fresh & Easy, especially in light of a March 13 report from Mike Dennis, a U.K.-based analyst with Piper Jaffray, who alleged stores were 70 percent under original sales projections. In March, Dennis told London’s Evening Standard newspaper that the “Fresh & Easy concept is not right, and they need to quickly find out what the issues are and reset the concept.”

Tesco hasn’t commented on Dennis’ allegations and said its sales are on track with original projections, though the company hasn’t released sales figures and won’t do so until late 2008.

To date, Tesco has made few notable changes to its business model, but it’s expected to address issues raised by some critics, including alleged problems keeping its shelves stocked, particularly in the produce section.

While some critics have been quick to paint Tesco as a retailer with problems, others say it’s too soon to judge it after just four months in business in the United States. “One thing they do very well is listen to consumers and make changes accordingly,” said George Whalin, president or Retail Management Consultants in San Marcos, Calif. “And they have a good track record [entering new countries], so they’ve been down this road before.”

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JPMA refutes media reports about dangers of baby bottle materials

BY Jenna Duncan

MT. LAUREL, N.J. The media has been asked by the Juvenile Products Manufacturers Association to halt stories with claims of purported negative health effects from using baby products containing bisphenol A (BPA). JPMA claims that statements of ill health linked to items containing BPA are often misleading and frighten consumers.

According to JPMA, research has shown that when used properly, products made with BPA do not pose a health threat.

Robert Waller, Jr., the president of JPMA, said, “JPMA is extremely disappointed in the media for speculating that Health Canada’s assessment of BPA would recommend labeling the chemical a dangerous substance, when in fact the report has not even been issued yet.”

Claims in the media have stated that risk may come from the plastic shields on pacifiers, parts of baby bottles or sippy cups being broken down or chewed, and then ingested with food or saliva. Scientific findings indicate that BPA may cause estrogenic effects in laboratory animals, and so concerns about the safety of baby products, especially bottles, has been under scrutiny.

JPMA, whose mission is to educate consumers and industry professionals about juvenile products and safety, is referring consumers to its Web site, www.babybottles.org, for more information on BPA and related health findings.

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American Greetings reports fiscal 2008 profit

BY Doug Desjardins

CLEVELAND American Greetings generated $83.3 million in earnings for fiscal 2008, including $15.6 million in the fourth quarter ended Feb. 29, and more than $1.77 billion in total sales for year. Total sales were down about 1 percent from $1.79 billion the previous year, but earnings were up 96 percent from $42.4 million.

“I’m pleased we were able to achieve earnings within our forecasted range and exceed our cash flow guidance,” said American Greetings chief executive officer Zev Weiss. “Our strong cash flow allowed us to make two acquisitions in the digital photo space and repurchase shares.”

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