According to the press reports that we have seen over the past two weeks, the Tesco home office in London is very unhappy about its American operation, with Fresh & Easy proving to be a major cash drain on the corporation's coffers. And because of this they could decide to cut their losses and pull the plug on the whole deal, and fairly soon.
A report from Reuters on June 29 (click here) tells this very melancholy tale:
Tesco Weighs Future of Fresh & Easy - World No. 3 retailer Tesco promised to pull the plug on its loss-making Fresh & Easy chain in the United States if it continued to disappoint, and rejected new calls for an independent review of its strategy for the venture.
"If we see no chance of success, we'll do as we've done in Japan," said chief executive Philip Clarke, referring to Tesco's deal this month to exit that market.
Then there is also this from the UK newspaper The Telegraph (click here):
Tesco will leave US if it fails to make profit - Philip Clarke, the chief executive of Tesco, has signaled that the company will abandon its American supermarket venture if it cannot make it work.
Mr. Clarke's remarks were made at a testy annual meeting in Cardiff, where shareholder's repeatedly questioned the Tesco boss about the supermarket group's declining fortunes.
Fresh & Easy, Tesco's grocery chain on the west coast of America, has yet to make a profit despite an improvement in sales following a major revamp of the business. Last years it racked up losses of 153m (in British pounds), after losing 186m in the previous year.
What does this mean for Sierra Madre? To begin with the much ballyhooed interest of Fresh & Easy in moving into the space at the corner of Baldwin and Sierra Madre Boulevard might not be quite as certain a thing as many here had perhaps too easily assumed. For the parent company in Great Britain to be publicly stating that they are taking a serious look at shuttering their failing U.S. enterprise should probably be taken as evidence that Fresh & Easy isn't exactly in a position to save Sierra Madre.
There is also something else that we should consider. What if Taylor's Quality Meats, a legacy Sierra Madre business if ever there was one, is chased out of their current location by a frantic LLC landlord eager to unload its bad investment on Fresh & Easy? Is there any guarantee that parent company Tesco will continue to prop up what is by some accounts a dying venture? Leaving us with nothing at all on that site?
Hopefully these matters will be taken into account when the Fresh & Easy people start hanging around City Hall looking for permits and a CUP. Certainly it would behoove us to know that they will actually be around for more than a minute before we allow them to start tearing things up at Baldwin and Sierra Madre Boulevard.
It is bad enough that we might be losing Taylor's for an outlet of a mediocre supermarket chain that, in my opinion, is neither compelling or necessary. What would make matters even worse is if we should lose Taylor's for what turns out to be absolutely nothing.
A word of caution. Should this situation be improperly handled, we could end up with another blighted property not unlike the Skilled Nursing Facility. That must now be considered a distinct possibility.