Only three weeks after opening its first American stores, near Los Angeles, Tesco is looking at dozens of sites in Northern California as it seeks to extend its Fresh & Easy convenience chain. It is part of the supermarket’s expansion drive in the U.S. to give it 1,000 stores generating nearly $10 billion of annual sales.

The group is also in talks about taking on a second distribution center in Stockton, Calif., just outside of San Francisco, that could service up to 500 Fresh & Easy stores around the San Francisco Bay Area, Fresno and Sacramento, the Times of London reported.

Tim Mason, Fresh & Easy’s chief executive, said that Tesco planned to open another distribution depot further north to serve Seattle and Portland. Such a move would give Tesco the potential for its biggest overseas chain of Tesco Express-style convenience stores, stretching the length of the Western Seaboard.

Tesco has 15 Fresh & Easy stores around Los Angeles, Las Vegas and San Diego. It will open stores in Phoenix, Arizona, this week, backed by the company’s first marketing campaign in the US. All the existing stores are supplied by a huge distribution centre at Riverside, near Los Angeles, which has the capacity to serve a network of 500 sites, the report said.

Publicly, Tesco has committed itself to opening only 200 stores in Southern California and Arizona by February 2009. Fresh & Easy claims to be up to 25% cheaper than its main supermarket competition. Average sales are expected to settle at up to $200,000 per store per week.

Tesco’s plans are still largely secret. However, retail consultant TNS believes that the group could achieve annual sales of $10 billion in the U.S. by 2015. Tesco has considered launching in Denver and is expected to move to the East Coast.