(April 15, 4:15 p.m.) Cheshunt, England-based Tesco says its U.S. concept, the Fresh & Easy Neighborhood Market, is meeting expectations.

In its annual earnings report released April 15, the retailer reported a 12.3% increase in net profits for fiscal year 2007-08.

Some of its 59 Fresh & Easy stores, which opened last year, have met their $20-per-square-foot expectations, the retailer said in a statement.

“Sales are ahead of budget and sales densities are already higher than the U.S. supermarket industry average, with our best stores exceeding $20 per square foot per week,” the company said. “We are seeing strong growth in the early stores as we step up, as planned, on our marketing programs and as we build awareness of the brand.”

The company, which in March announced it was slowing down on new store openings, said it plans to open around 150 new stores this year.

“Progress with real estate has been good, and we have secured enough sites for our immediate needs — although the deteriorating property market, particularly in Arizona and Nevada, will mean that some of the third-party developments in which we had planned to open prototype stores later this year will now be deferred,” it said.

The initial launch of Fresh & Easy cost Tesco less than it planned, $121.6 million compared to the $127.5 million it expected.

The company expects to spend an additional $74.5 million.

“We expect losses to rise to around £100 million ($196 million) and then reduce thereafter as early stores begin to mature and we see increased overhead recovery from higher volumes,” the company said.