just the facts - A&P

Ailing US retailer A&P this morning (13 December) announced it has filed for bankruptcy in a bid to fully restructure a business loaded with debt and hit by competition. Here just-food takes a look back the firm’s history.

The Great Atlantic & Pacific Tea Company, better known as A&P, is a 429-store supermarket chain with locations in Connecticut, Delaware, the District of Columbia, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, and Virginia, under several banners.
From the 1920’s to the 1960’s A&P was considered the dominant food retailer in the US, and was ranked number 19 in Supermarket News’ 2010 ‘Top 75 Food Retailers and Wholesalers’ based on 2009 fiscal year estimated sales of $9.1bn. However, the firm announced it had filed for bankruptcy today, months after recording substantial second-quarter losses.
The firm started out with around 67 stores at its inception in 1876, reaching a peak of 16,000 stores in the 1930’s, before a slow decline to the approximate 429 stores it owns to date.
German firm The Tengelmann Group bought a stake in A&P in 1979. Tengelmann holds an approximate 38.5% stake in the firm, with US investment firm Yucaipa holding a 27.5% share. The rest is held by individual shareholders and investor groups.
In November 2002, A&P sold its Eight O’Clock Coffee division to Gryphon Investors, a San Francisco based private equity firm. The company realised proceeds of $107.5m and received a contingent note for up to $20m.
Four months later, between February and May 2003, A&P closed a raft of stores, including nine supermarkets in northern New England, to supermarket companies Stop & Shop and Big Y Foods, seven Kohl’s supermarkets to The Copps Corporation, and eight A&P stores in northern New England to GU Family Markets.
In a bid to restore profitability, A&P closed 15 of its Farmer Jack stores in the Southeast Michigan area stores in February 2004.
In August 2005, Great Atlantic sold A&P Canada to Canadian supermarket company Metro Inc. The company received proceeds of around $1.55bn in cash, stock and certain debt that was assumed by the buyer, after giving effect to foreign currency contracts.
In a deal worth $1.3bn in cash, stock and debt assumption, A&P entered into a merger agreement to acquire Pathmark in March 2007. Under the terms of the deal, A&P’s largest shareholder – The Tengelmann Group – remained the single largest shareholder of the combined entity.
A September 2007, A&P sold 19 Sav-A-Center stores in New Orleans to Louisiana-based Rouse’s Supermarket. The sale, the retailer said, was part of its strategy to focus its operations in the north-east of the US.
A month later, A&P sold 6.35m shares in Metro Inc, generating proceeds of around US$203.5m. The cash was used to fund its acquisition of Pathmark Stores, which it bought the same month. The merger agreement saw A&P acquire Pathmark for $1.3bn in cash, stock and debt assumption.
In the same month, the firm sold all of its remaining 11,726,645 shares of Metro, the Canadian grocer. Great Atlantic said the deal had been made in connection with financing of the acquisition of Pathmark Stores, which it bought in March 2007. Some 1,500,000 of the shares sold were acquired by Metro itself.
Following a tumultuous year, with growing losses, the integration of 2007 acquisition Pathmark and changes in its executive team, A&P vowed to make the US retailer “great, again” after the company’s net losses ballooned in the 12 months to 27 February.
Between April and September 2010, A&P made a raft of appointments. Mark Kramer was named senior vice president of operations in April.The retailer also named its second chief executive – Sam Martin – in six months in July. Paul Hertz was appointed executive vice president of operations a month later, while Frederic Brace took the newly created role of chief administrative officer, in the same month.
In September 2010, A&P sold seven stores in Connecticut as part of its plan to turn around its whole business. A&P said the sale of the stores to Big Y Foods was part of a turnaround strategy announced months earlier.
In the same month, A&P were reported to have stopped paying rent on nearly 2 million square feet of retail and industrial space in Detroit, triggering 24 lawsuits. Crain’s Business Detroit reported that A&P was trying to walk away from nearly US$150m in unpaid rent in metro Detroit, nearly three years after the grocer’s Farmer Jack stores left the region.
In October 2010, A&P saw its second-quarter losses almost double on the back of falling sales – but the company said it had completed the first phase of a bid to revive the business. A&P posted a US$153.6m net loss for the second quarter ended 11 September against an $80.3m loss in the same period of the previous year. As a result, the retailer revealed a raft of changes, pinning many of its turnaround hopes on a new executive team.
In November 2010, A&P sold six Pathmark stores under a sale-and-leaseback deal. The agreement, worth US$89m, covered six outlets across New Jersey, Pennsylvania and Delaware.