LONDON - British supermarket retailer Tesco is planning to expand its U.S. Fresh & Easy store presence, living up to the vision it proposed when it first moved into the U.S. three years ago, the Financial Times reports.

The retailer currently has 155 15,000-square foot stores in southern and central California, Arizona, and Nevada.

Next month, it will expand into northern California with about a dozen stores around San Francisco and Sacramento.

California commercial real estate agents said that the chain is also assessing locations in and around Los Angeles for smaller convenience store-sized versions of its stores.

"It is a lot easier to find 4,000 sq ft than 15,000 sq ft around here," said one Los Angeles real estate agent.

Fresh & Easy said that it would "remain flexible in our store footprint in order to open in all different types of neighborhoods."

Fresh & Easy reported sales of $247 million in the six months to August 28, 2010, with a trading loss of $95 million. But with plans to accelerate store openings, it said it expects to reach profitability in the U.S. by the 2012-13 fiscal year.

The retailer reported like-for-like sales growth of about 10 percent, data it says confirms "the components of a profitable business model are now coming together."

However, it faces stiff competition from Walmart, which has begun purchasing sites in southern and northern California for a new "Walmart Market" format of about 25,000 square feet as well as smaller bodega-style stores in urban areas.