• October 1, 2008

Fresh & Easy, Tesco's fledgling U.S. grocery chain, continues to surpass the company's expectations, and is achieving greater sales per square foot than many of its competitors. For the first time, Britain's retailing behemoth included a breakdown of U.S. results in its earnings announcement, revealing that the new chain--now up to 90 stores in the western U.S.--is selling an average of $11 per square foot per week, "substantially higher than the U.S. supermarket industry average." Its best stores, it says, are selling at $25 per square foot.

Since its launch, some observers have speculated that the chain stumbled out of the starting gate. But the company says that tweaks on its design, including creating "a warmer in-store ambience, the introduction of a small number of promotions, more prominent point-of-sale material and some new products," have paid off in higher sales.

Sales for the six-month period came in at $135.1 million, generating a loss of $106.7 million. Those losses, it says, have occurred because the nine-month-old business "has been built with the necessary infrastructure in place to support hundreds of stores. At this stage, it is therefore operating with high overhead and other costs in relation to the scale of the business, whilst also trading from immature stores."--Sarah Mahoney