A&P — which as The Great Atlantic & Pacific Tea Company was the Walmart of its day to mom and pop dry grocers, butchers and bakers eking out a living in tiny shops with limited selection — filed for Chapter 11 bankruptcy protection late Sunday listing assets and liabilities of more than $1 billion, according to a Reuters report.
It is preparing to sell 120 of its 296 stores to bidders already in place, seek offers for most of the others, and shut down a couple of dozen that are in the worst financial shape, according to a report in the Wall Street Journal about the impending filing posted early yesterday morning.
“The 156-year-old company, like some other traditional supermarket operators, in recent years has experienced declining sales and profit margins as big low-cost operators like Wal-Mart Stores Inc. and Dollar General Corp. have expanded into the grocery business,” point out the WSJ’s Dana Cimilluca and Matt Jarzemsky. “At the same time, chains catering to health-conscious consumers, like Whole Foods Market Inc., have attracted higher-end shoppers.”
In 2010, the year after its 150th anniversary, Sam Martin was named president and CEO and the company embarked on a turnaround plan and filed for Chapter 11 “to enable it to restructure its operations and financial obligations,” according to an official timeline. At the time, it was “drained of cash by tough competition and a sluggish economic recovery,” according to Reuters.
It exited Chapter 11 as a private company with 320 stores in 2012. The company is based in Montvale, N.J. and now operates 301 stores in Connecticut, New York, New Jersey, Pennsylvania, Delaware and Maryland under the A&P, Best Cellars, Food Basics, The Food Emporium, Pathmark, Superfresh and Waldbaum’s banners. It has about 34,000 employees. Paul Hertz was named president and CEO in March 2014.
In article on NorthJersey.com last Tuesday, the Record’s Joan Verdon wrote, “reports continue to surface of vendors refusing to extend credit to the company, and of landlords not receiving rent checks.”
One internal document Verdon reviewed indicated that many of the stores in New Jersey had double-digit sales declines between 2013 and 2014, with sales at some stores down by as much as 16%.
The chain “has been restructuring for 20 years. And what has happened in 20 years? It's all gotten worse,” Howard Davidowitz, chairman of retail consulting and investment banking firm Davidowitz & Associates, tells Verdon. “What they have now is a non-viable business, but underlying that non-viable business is valuable real estate that good operators — be it drugstores, cosmetics, discount stores — could make money with.”
The article drew nearly 200 impassioned comments from shoppers complaining of high prices and workers, mostly former, pointing to mismanagement dating back to the ’90s.
The first commenter, in fact, wrapped both sentiments up neatly in one package: “…They play these insulting, stupid little games, inflating the prices, and then ‘discounting" them.’ And then they have the audacity to have the cashiers circle in a red pen on your receipt, and tell you verbally, how much you saved today. The management thinks people are stupid.”
An article in Food Trade News earlier this month indicated that both A&P and another regional powerhouse, Stop & Shop, were losing market share to ShopRite under a hed that read: “ShopRite Unstoppabble.”
“Now with 253 stores (including Fresh Grocer), ShopRite rang up estimated sales of $13.73 billion or 14.41% of the entire $95.3 billion Food Trade News’ marketing area [a 70-county area from Connecticut to Delaware]. ShopRite’s increased market share is now nearly twice that of second-ranked retailer Stop & Shop,” according to the article.
A&P was third, with estimated sales of $5.78 billion for all of its banners. As for the A&P flagship, it “opened no new stores again (it operated 270 stores, two fewer than last year) and produced identical store sales that were the worst in the region for retailers with more than 25 stores.”
When the company emerged from bankruptcy in 2012, it said it had “assembled a new management team, refurbished stores and concentrated them near core markets, negotiated a new agreement with its principal supplier, and modified collective-bargaining pacts with unions,” according to a story by Bloomberg’s Cotten Timberlake, and JPMorgan Chase & Co. and Credit Suisse had arranged $645 million in exit financing.
“The company won court approval Feb. 28 for its plan to restructure and leave bankruptcy with $490 million in debt and equity financing from an investor group that includes Ron Burkle’s Yucaipa Cos.,” Timberlake wrote.
But now it’s back in U.S. Bankruptcy Court, Southern District of New York, Case No. 15-23007.