Tesco has said that losses at its Fresh & Easy Neighbourhood operation, amounting to over US$100m during the first half of 2008, were in line with expectations as the group looks to establish itself in the US market.
The UK-based retailer reported sales of US$133.8m for the six month period ended 23 August, with an overall loss of US$105.6m.
'These planned losses reflect the fact that the US business – which has been trading for nine months – has been built with the neccessary infrastructure in place from the beginning to support hundreds of stores,' the group said in a statement. '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.'
The group has secured a number of sites in northern California for further expansion, according to The Packer, although no announcement has been made regarding launch dates.
'Customer response to our combination of fresh, wholesome food at very competitive prices in neighbourhood locations has been extremely positive,' the company said. 'Feedback from new as well as regular shoppers continues to surpass our expectations.'
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