LONDON - Tesco announced earlier this week that it will assume the U.S. operations of two major suppliers of its Fresh & Easy business, which has not expanded as the company had expected, the Financial Times reports.

The two suppliers, Wild Rocket Foods (produce) and 2 Sisters Foods (meat), followed Tesco as it entered the US five years ago and are housed in facilities adjacent to Fresh & Easy's distribution center, which is roughly 50 miles east of Los Angeles.

Tim Mason, head of Fresh & Easy, said the move underscores his company's commitment to the U.S., and would ultimately lead to "synergies and economies by putting the management teams of the units together...we think will be very beneficial for the business". It is expected to add about 750 employees to Tesco's payroll.

Mason acknowledged that Fresh & Easy's expansion plans are far slower than the company had originally expected, as Tesco had envisioned nearly 250 U.S. stores by the end of this year.

"Has Fresh & Easy gone more slowly than we initially planned and they initially planned? Well, yes. And that has obvious consequences," Mason said.

However, he maintained that the company's neighborhood stores were gaining customers and establishing a strong brand, despite the recession. "We do really believe we are developing a significant brand here that will be of huge value once the economy recovers," Mason said.

Tesco opened its first US stores in southern California, Nevada, and Arizona in 2007, saying it would invest more than $1.85 billion over five years. The stores have yet to turn a profit, though Tesco announced last week that annualized comparable store sales were growing at "a high single digit" percentage rate.