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Tesco U.S. debut expected in November

BY Doug Desjardins

LOS ANGELES —Tesco still is being cagey about where it will open its first U.S. store, but it appears set to make its stateside debut in early November in either Phoenix or Los Angeles.

Tesco has been releasing news of its plans for the United States in drips and drabs, but announced in late September that it will build small-format Fresh & Easy supermarkets in 48 cities in Southern California’s Inland Empire, the area in the Riverside and San Bernardino region. And it’s no big surprise, since its first U.S. distribution center is located in Riverside, Calif.

In announcing the openings, Tesco chief executive officer of U.S. operations Tim Mason said the first two stores would open this year in the cities of Upland and Hemet, with 17 due to open in 2008 and 29 in 2009. He said stores would serve “underserved” communities and that multiple locations are planned for such cities as Riverside and Morena Valley. The 10,000-square-foot stores will emphasize fresh and prepared foods with an emphasis on Hispanic fare.

In the short term, building nearly half of its first 100 stores in the Inland Empire makes sense because it will allow Tesco to ramp up its distribution center slowly as it serves a store base with most locations nearby. Long-range plans call for Tesco to open up to 300 stores in California, Nevada and Arizona over the next several years.

As for its first opening, Tesco still hasn’t made an announcement, but analyst George Whalin said he thinks it will debut in Phoenix instead of the higher-profile Los Angeles market. “It was supposed to be Los Angeles, but with all the issues they had with the unions and other problems out here, I’m hearing it’s going to be Phoenix in early November,” said Whalin, president of Retail Management Consultants in San Marcos, Calif.

Once the first store opens, though, they should expand at a rapid clip, said Whalin, who said he’s seen several stores that are well along in the construction process. “They have a lot of stores that are almost done, so I’d expect them to roll out fast.”

The impending arrival of Tesco has grocery chains in the region concerned, but most are waiting to have a first look at Fresh & Easy before responding. Safeway chief executive officer Steve Burd said he wants to see what the stores look like and how they’re merchandised before making a move.

“We’re just waiting to see them go to market first, and then we’ll respond to that,” said Burd, who added that Safeway has no plans to test a small-format store.

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Fred’s reports both monthly and quarterly record sales

BY Allison Cerra

MEMPHIS, Tenn. Fred’s Inc. reported record sales for the five-week and eight-month periods which ended Oct. 6, 2007.

The company said Friday that its total sales for the month increased 2 percent to $161.4 million compared to the same period last year. Total sales for the year-to-date period increased 5 percent to $1.157 billion.

Same store sales for the month rose 1 percent on top of a 5 percent increase in September last year. On a comparable store basis, sales increased 1.3 percent through the first eight months of fiscal 2007 compared with a 2.7 percent gain in the year-earlier period. Same-store sales are a key predictor of how well the company performs in stores that have been open for several years, and how well the newly open stores will do in the future.

“September sales came in at the low end of our forecasted range of a 1 percent to 3 percent increase, affected by unusually warm weather across our markets and the disruption caused by the updating of 98 stores under our refresher program,” said Fred’s Stores chief executive officer Michael J. Hayes. “We look forward to finishing our refresher program in October with the last 60 stores and to a better economic environment for our customers going forward, as the benefits of the minimum wage increase and the focus of Federal Reserve Board on the credit crunch take hold.”

Fred’s opened four stores at the end of September, bringing total store openings to 22 for the year-to-date period. These new store openings have been balanced by the company’s decision to close underperforming stores. In the remaining months, Fred’s Stores said that it plans to open 14 additional stores, with no further planned closings, which will result in a net increase in stores of 2 percent for the year.

Fred’s Inc. operates 702 discount general merchandise stores, including 24 franchised stores in the southeastern United States.

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Target to open another 61 stores nationwide

BY Allison Cerra

MINNEAPOLIS Target announced that it will be opening an additional 61 Target stores, the company said Friday.

The stores, which will all open Oct. 14, will open in 22 different states. The majority of the stores are making their debut in Arizona, California, Ohio and Texas.

In addition to offering the latest in trend-right merchandise, Target also brings a 44-year tradition of community involvement. The retail chain commits itself to local communities donating more than $3 million each week to area nonprofit organizations, becoming involved in local volunteerism efforts through Target Volunteers, and orchestrating other special projects that help meet area social service, arts and education needs.

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