Tesco, Britain's biggest retailer, said the stores have been unprofitable since it launched the U.S. venture in 2007. The company said it will conduct a strategic review of the business, but will likely exit the U.S. marketplace, meaning the 200 stores in California, Arizona and Nevada may shut their doors, leaving some 5,000 employees jobless.
Local Fresh & Easy corporate management is remaining hopeful stores will stay open, and that's a possibility if Tesco partners with another investor or sells portions of the business.
"The purpose of the strategic review is to take a look at the business and what our parent company is doing is taking a step back and looking at Fresh & Easy," said Brendan Wonnacott, a Fresh & Easy corporate affairs director. "For us, we have to maintain our focus on our customers and on our people."
Tesco has hired an advisory firm to conduct the strategic review. The report is expected to be released by April.
The United Food and Commercial Workers union released a statement saying, "Tesco's announcement today forces thousands of Fresh & Easy workers in California, Arizona, and Nevada to face a holiday season filled with uncertainty and fear if their jobs and stores will still be there in the new year. These job losses could have been avoided if Tesco had chosen to engage with community stakeholders and its customers to address the many underlying problems and warning signs of the troubled Fresh & Easy model."
Like-for-like sales at Fresh & Easy, which exclude new stores and space, grew less than 2 percent in the third quarter.
Fresh & Easy's chief executive, Tim Mason, will be leaving.
The Associated Press contributed to this report.