A company spokesman on Tuesday confirmed that at least two Las Vegas-area Fresh & Easy grocery stores will close under a deal that will see most of the chain of small markets acquired by an investment firm controlled by billionaire investor Ron Burkle.
Tesco PLC will lend Burkle’s The Yucaipa Cos. LLC $126 million to acquire the British retailer’s money-losing Fresh & Easy chain of markets, including 21 in the Las Vegas area.
At least 40 employees are expected to be laid off when the two stores in Las Vegas close in the coming weeks. The locations of the two stores were not released.
“We plan on continuing to build Fresh & Easy into a next-generation convenience retail experience, providing buys consumers with more local and healthy access for their daily needs,” Burkle, managing partner of Yucaipa, said in a statement.
Burkle applauded Tesco for “giving their customers an affordable … convenient shopping experience.” He said the chain’s dedicated employees and great customer base “give us a solid starting point to complete Tesco’s vision with some changes that we think will make it even more relevant to today’s consumer.”
The deal announced Tuesday ends Tesco’s six-year attempt to do business in the U.S. market. Fresh & Easy has never made a profit, according to Tesco.
Tesco said Yucaipa will acquire some 150 of 200 stores as well as its Riverside, Calif., distribution and production facility. Some 4,000 Fresh & Easy employees will transfer to the new company.
“The decision we are announcing … represents the best outcome for Tesco shareholders and Fresh & Easy’s stakeholders,” said Philip Clarke, CEO of Tesco, in a statement. “It offers us an orderly and efficient exit from the U.S. market, while protecting the jobs of more than 4,000 colleagues at Fresh & Easy.”
Tesco said in April it would sell or close Fresh & Easy, a subsidiary that opened its first stores in November 2007. The company grew to 200 markets in Nevada, California and Arizona.
Fresh & Easy employs more than 5,000 people, including 1,300 at its Riverside facility. Yucaipa, which expects the acquisition to close within three months, is assuming assets with a gross asset value of $360.7 million and reported a net loss of $257 million during the fiscal year ended Feb. 23.
The total cash outflow relating to the closure of these stores should be no more than $235.9 million, which includes the $126 million loan.
In an email to customers titled “A Note to our Friends,” Fresh & Easy said that of the stores that will be closing only, all product (with some exceptions) will be 25 percent off and those stores will remain open until remaining stock is cleared.
Contact reporter Chris Sieroty at email@example.com or 702-477-3893. Follow @sierotyfeatures on Twitter.