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In tandem with the launch of an extensive turnaround to bolster its operating and financial underpinnings and improve the customer experience, the board of directors of the Great Atlantic & Pacific Tea Co., Inc. (A&P) has appointed Sam Martin president and CEO, succeeding Ron Marshall, who has left the company. The company also reported its fiscal 2010 first-quarter results, which showed a decline in comparable sales of 7.2 percent
“The board and the company’s major shareholders, Tengelmann and Yucaipa, have been instrumental in developing what I believe is the right turnaround strategy for A&P,” noted executive chairman Christian Haub. “As we moved to the implementation and execution stage of this comprehensive operational and revenue-driven turnaround, the Board determined that the company needed a leader at the helm with the skill set Sam Martin possesses. Sam is a proven, hands-on operational expert in the food retail industry. He has an ideal mix of food industry management experience encompassing operations, merchandising and supply chain. We are confident that he will successfully drive the rapid implementation of our multi-faceted effort to make A&P a stronger and more efficient company.”
Martin, a three-decade veteran of the food retail industry, joins A&P from OfficeMax, where he became COO in 2007. In this position, he handled all domestic and international contract and retail merchandising operations of the company, supply chain and communications. Before joining OfficeMax, Martin was COO for Wild Oats Markets, Inc., through that company’s acquisition by Whole Foods. His experience additionally includes senior management positions at ShopKo Stores, Inc. and Fred Meyer.
Sam Martin said he, in concert with Haub, the board and A&P’s associates, would “quickly execute on the opportunities for improving our performance in the near term and … put the company on a solid foundation for the future.”
A&P sales for the first quarter were $2.6 billion vs. $2.8 billion in the year-ago period. Comparable-store sales fell 7.2 percent. Adjusted loss from operations was $51 million, vs. adjusted income from operations of $4 million reported last year.
For the first quarter, reported loss from continuing operations was $116 million, including charges of $5 million for long-lived asset impairment and income of $8 million for mark to market adjustments related to financial liabilities. Loss from continuing operations in last year’s first quarter came to $58 million, including losses of $2 million for mark to market adjustments related to financial liabilities.
“Although we are clearly disappointed with our performance in the first quarter, we are confident that we now have the right leadership in place to drive this operational and revenue-driven turnaround effort and make A&P a great company again,” said Haub. “We are focused on improving our customer value proposition, as well as significantly reducing our structural and operating costs. Our progress on enhancing our customers’ experience across our store formats illustrates our commitment to moving forward aggressively. We remain steadfastly focused on taking the actions necessary to position A&P for a strong future.”
The grocer’s turnaround initiative aims to generate sustained profitability and cash flow, drive sales growth, restore competitive margins to the business and strengthen the foundation of the company for the long term. Its four key elements are to improve the customer value proposition through merchandising; enhance the customer experience and drive clear brand identity; reduce structural and operating costs; and put in place new financing initiatives to augment first-quarter liquidity of $253 million.
Additionally, the company is looking into such capital-raising opportunities as incremental financing through its current bank facility, as well as sale-leaseback transactions and the sale of certain non-core assets.
“I firmly believe that this turnaround will strengthen A&P’s operating foundation and improve our performance,” said Martin. “I have faced similar situations in my career and have successfully navigated through them. We will move quickly to implement this turnaround for the benefit of all our stakeholders.”
His confidence was echoed by Haub, who added, “Tengelmann and Yucaipa remain actively involved in our efforts to improve the company’s performance, and I am encouraged by their continued belief in the long-term value of their investment in A&P.”
Montvale, N.J.-based A&P operates 429 stores in eight states and the District of Columbia under the following banners: A&P, Waldbaum’s, Pathmark, Pathmark Sav-a-Center, Best Cellars, The Food Emporium, Super Foodmart, Super Fresh and Food Basics.