London -- Grocery chain Fresh & Easy’s British parent Tesco confirmed Wednesday that it will abandon its U.S. business, selling off the 199-store chain and taking a $3.5 billion write-down.
According to a report by Reuters, the world’s third largest retailer behind Wal-Mart and Carrefour wrote down the value of its global operations by $3.5 billion, saying that abandoning Fresh & Easy in the U.S. would mean restructuring and other one-off costs of $1.5 billion. The remaining write-downs come from de-valuing British properties and its businesses in Poland, the Czech Republic and Turkey.
Tesco appears to be buoyed by its decision to divest Fresh & Easy. "I've been working for Tesco for nearly 40 years and I can tell you this — it already looks, feels and acts like a different and a better business," CEO Philip Clarke told reporters, including Reuters.
"It will take time — retail is detail - but we believe that Tesco is on track and we expect recovery in the U.K. to slowly emerge in fiscal year 2014," Panmure Gordon analyst Philip Dorgan told Reuters.
Fresh & Easy has never turned a profit, struggling against competitors such as Trader Joe’s and Wal-Mart. Clarke put the business under review last December and made no secret that an exit was likely. And buyers appear to be approaching the table. CFO Laurie McIlwee told Reuters that Tesco had received "a lot of interest" in Fresh & Easy, both for the whole business and parcels of stores.
"What we're most interested in is those buyers that are interested in buying the complete business," he said.
The process is expected to continue for at least another three months.