Is this foreal? It mentions Downtown LA as being one of the first areas to get one of these new Tescos. I hope this writer didn't mistaken Glassell Park for Downtown LA! The writer got the "lotsa development of lofts" part right, but obviously is wrong about "not having a supermarket for several miles away" part, because Ralphs just opened in the central part of DTLA. HMM.....
Tesco: The British Are Coming!
http://www.fool.com/investing/intern...re-coming.aspx
Holmes Osborne, CFA
August 3, 2007
Bangers and mash, anyone? British supermarket behemoth Tesco is making its foray into the U.S. this fall, with a grand opening in Los Angeles and other western cities. Under the banner Fresh & Easy, the 10,000-square-foot stores will cater to health-conscious shoppers, people on the go, and a variety of budgets. Investors may want to take a closer look.
Downtown Los Angeles -- once known for its poverty, but now booming with the development of lofts -- will host one of the first stores. The nearest competing supermarket will be several miles away.
While most markets carry up to 10,000 items, Fresh & Easy will offer only about 3,000. Its focus will be on healthy foods and prepared meals for busy people. How healthy? According to a Barron's article, the stores won't even carry cigarettes.
Tesco has 3,263 stores worldwide, with 1,988 of them in Great Britain. Other operations are scattered far and wide: China, the Czech Republic, Hungary, Ireland, Japan, Malaysia, Poland, Slovakia, South Korea, Thailand, and Turkey. Not counting its stores in the U.S., Tesco plans on opening 75% of its new stores outside the U.K. It's truly a global company, and it thrives wherever it goes.
That continued success is a result of conducting extensive market research before entering a new area. Before the Los Angeles move, Tesco went as far as opening a model store in an L.A. warehouse. Executives kept things secret by telling contractors they were using the site to shoot a movie.
Tesco does quite well going head-to-head with Wal-Mart (NYSE: WMT), which sometimes has a problem making its Bentonville way of doing things work overseas. For example, Seiyu, 51% owned by Wal-Mart, laid off 1,500 workers a few years ago in Japan. That didn't go over too well in the land of the rising sun -- in fact, out-of-work employees are still complaining to the media about Wal-Mart.
Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) seems to like Tesco, too. Its GEICO insurance investment division, managed by Lou Simpson, owns almost 3% of Tesco's stock. And Simpson is a buy-and-hold type of investor who likes companies with strong brand names.
He's no doubt aware that revenues and earnings per share have grown 11% a year since 2002. With the British pound valued at more than 2-to-1 against the dollar, U.S. investors have seen a 200% gain since 2003. And don't forget that nice 2.45% dividend yield.
Tesco could be an appealing long-term hold. While baby boomers age in developed countries, Tesco is making a name for itself in emerging markets in Eastern Europe and Asia. Shareholders might just be able to sit back and watch Tesco eat the competition's lunch.