Tesco today (20 April) stood by its US retail arm Fresh & Easy, insisting losses from the business had “flattened out” and outlining plans to open more stores in the next 12 months.

The UK’s largest retailer said losses from Fresh & Easy had reached GBP165m in the 12 months to 27 February but said store openings and organic growth had boosted sales by 58% to GBP354m.

Tesco’s Fresh & Easy stores are based in parts of the US, including California, that have particularly suffered during the downturn.

The UK group, which first entered the US in 2007, had put the brake on further expansion of Fresh & Easy during the downturn.

However, speaking as Tesco issued its annual results, finance director Lawrie McIlwee said the company would look to build the business further as its losses had peaked.

“We’re at a point where the losses are really flattening out and where we can take Fresh & Easy forward,” McIlwee said.

Chief executive Terry Leahy insisted the venture was growing in popularity with local consumers across all income groups.

“The consumers that get it are completely hooked on it. Fresh & Easy has a different offer and is a different way of shopping,” Leahy claimed.

The Tesco boss said the company would look to open 50 Fresh & Easy stores this year and, although he acknowledged the economic pressure in states like California, he emphasised that the group would continue to focus on states where it was already present.

“We’ll stay focused on California, Arizona and Nevada. When we look back now, you could say we should have started in Texas but that’s hindsight. Back then, California was the place to be.”

Leahy added: “I already know it’s going to be a success. It’s just a question of how big a success – and we’ll wait to see on the economy for that.”