By Shad Bookout
Monday's filing for Chapter 11 bankruptcy by Tesco PLC (NASDAQ:TESO) brand Fresh & Easy Neighborhood Market Inc. "is simply the next step in the restructuring process" for its sale to Yucaipa Cos., Tesco said in a statement.
"It's business as usual as we continue the transition to new ownership," the company said.
In its past six years of operation, Fresh & Easy realized continuous steep quarterly losses that finally led Tesco to begin seeking a buyer earlier this year. The retail giant found that buyer in Los Angeles billionaire Ron Burkle's Yucaipa Cos., which has acquired stakes in A&P, Supervalu and other retail chains, and previously operated Wild Oats Markets.
Some analysts speculate that this move provides the opportunity for Yucaipa to relaunch Wild Oats, which has been closed since 2007. Another hint of a Wild Oats rebirth is a Wild Oats trademark application that surfaced this summer with Yucaipa's Sunset Boulevard address.
Fresh & Easy was plagued from its inception, with the unfortunate timing of opening its stores right before the U.S. recession began. The U.K.-based chain also didn't relate well to U.S. consumers in terms of product selection, pre-packaged produce, and its reliance on self-checkout technology. Plus, falling real-estate prices and increased lease pressures plagued its nearly 200 stores in California, Arizona and Nevada.
This bankruptcy filing allows Fresh & Easy the ability to settle lease debts and cancel lease contracts that would have continued the downward spiral. The sell-off includes over 150 of its stores as well as a production facility in Riverside, Calif.