Fresh & Easy closing 7 more Arizona stores

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By Catherine Holland By Catherine Holland
By Catherine Holland By Catherine Holland

GILBERT, Ariz. – Arizona is losing seven more Fresh & Easy Neighborhood Market stores in the wake of the chain’s sale. That’s about a third of Arizona’s Fresh & Easy locations.

Earlier this week, Fresh & Easy’s parent company, British retail giant Tesco, announced the sale of the business to The Yucaipa Companies LLC, which was founded in 1986 by California billionaire Ron Burkle.

According to the Phoenix Business Journal, an employee of the store at Gilbert and Guadalupe roads said that location will be shutting down. A banner outside the store announcing a “store closing sale” confirms that.

The employee did not know what other locations would be closing. Closures also have been announced in Sacramento, San Diego and Fresno, Calif. A total of about 50 stores will close, which means some 400 employees will lose their jobs.

The sale to Yucaipa, a private-equity firm,  came several months after Tesco announced its intention to leave the US market, wrapping up an ill-fated experiment with American shoppers. Tesco's losses since opening Fresh & Easy in 2007 total about $2 billion.

"[The sale] offers us an orderly and efficient exit from the US market, while protecting the jobs of more than 4,000 colleagues at Fresh & Easy," Tesco CEO Phillip Clarke said in a news release announcing the sale to Yucaipa.

Burkle, whose first job in the supermarket business was as a bag boy in his father's grocery store, is known for turning around struggling chains.

Tesco and Yucaipa expect the deal to be wrapped up within three months. In addition to the stores, Yucaipa also will acquire the chain's Riverside production and distribution center. The sale price was not disclosed, but Tesco has agreed to loan Yucaipa about $126 million as part of the transaction.

While Tesco has done well with its range of compact Metro stores in the UK - built close to public transport links so shoppers can grab a few items of food on their way home from work - the idea did not translate well to the U.S.

American shoppers tend to drive to grocery stores, usually shopping for a week or two at a time. They also generally expect a broad range of products.

While Burkle has not revealed his plans for the foundering Fresh & Easy chain, he said in a statement that there is "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."

Fresh & Easy closed a dozen under-performing stores in January 2012. Four of those stores were in Arizona. That left 20 Arizona locations. With the new closures, that number will drop again -- to 13.

Fresh & Easy has more than 150 stores in Arizona, California and Nevada.

The Associated Press contributed to this story.