28 June 2010 | Nick Martindale
Tesco is to take over the US operations of two suppliers to its small-store Fresh & Easy business after the venture failed to meet its rapid expansion plans.
Both companies – Wild Rocket Foods and 2 Sisters Food Group – moved to the US with Tesco five years ago and provide fresh produce and meats from two locations next to the retailer’s distribution centre near Los Angeles.
Tim Mason, head of the Fresh & Easy business, said the move would bring the management teams of the units together. The deals are worth “tens of millions of dollars” and will involve 750 staff transferring to Tesco.
The retailer originally planned to open 300 Fresh & Easy stores throughout Arizona, Nevada and southern California but the recession has forced it to scale back its plans.
There are currently 159 stores but Mason said the intention remained to open a further 50 outlets by April 2011.
In April 2009 Tesco reported losses of £142 million from the Fresh & Easy business.
Tesco now plans to open a new global sourcing centre near California, which will co-ordinate the buying for both Fresh & Easy and the rest of its growing US operations.
Wild Rocket is owned by Langmead Farms, Tesco’s main supplier in the UK, while 2 Sisters is the retailer’s largest supplier of meat.