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In a clear indication of ongoing operating improvements, the Great Atlantic & Pacific Tea Co., Inc. posted sales of $2.9 billion, vs. $1.7 billion last year, for the 16-week first quarter of 2008 ended June 14. Comparable-store sales grew 3.2 percent, excluding sales for Pathmark stores acquired in December 2007 – the grocer’s fourth straight quarter of comp sales of over 3 percent.
Additionally, comps for Pathmark, measured during the same period, rose for the first time in many years to just over 3 percent, as A&P president and c.e.o. Eric Claus noted.
The first five weeks of the company's second quarter demonstrated the same positive sales trend at both businesses, noted company c.f.o. Brenda Galgano during a conference call Friday.
Net income from continuing operations was $3.8 million for the quarter, with a net loss per share of 48 cents, after adjusting for nonoperating income related to fair value adjustments, compared with income of $61.4 million, or $1.45, in the year-ago period.
“The company is also well underway with the completion of the Pathmark integration, as many of the planned milestones have been achieved,” added Claus. “As of the end of the first quarter, our annualized run-rate of synergies is approximately $100 million.”
Executive chairman Christian Haub said that “$150 million in projected annual synergies are well within our grasp, with the costs of the integration as we have planned.”
Among the additional highlights of the quarter, noted Claus, were the debut of the brand-new Price Impact format in two Pathmark locations, in Irvington and Edison, N.J., and the continuation of the Fresh format remodeling program, including a renovated store recently completed in Holmdel, N.J.
Claus described the Price Impact stores as having so far received “resounding positive feedback and very encouraging sales momentum.” During the conference call Friday, he said that the format's better price image and lower capital costs of remodels have prompted A&P to accelerate the rollout of Pathmark Price Impact stores, with a plan to convert many former A&P store banners, including the majority of the grocer's SuperFresh stores in the Philadelphia market.
"We expect superior returns from our investments in this concept," Claus said.
The two recently opened Pathmark Price Impact stores are the template for a "massive Pathmark refresh" to launch between now and the end of 2009, starting in earnest at the end of next month, with "quite a few projects" to be completed by mid-November of this year, the c.e.o. said.
Claus also said that for the rest of A&P's fiscal 2008, it would continue its “operating and aggressive merchandising strategies,” and maintain cost control and reduction disciplines throughout the business.”
Haub suggested the economic environment and attendant change in consumer behavior is actually benefiting the chain’s business, “as we are well positioned to take advantage of consumers trading from restaurants to grocery stores, consolidating their shopping trips due to higher gas prices, and seeking those stores that offer great quality and service at competitive prices.” Haub said the company would concentrate on such targets as capturing increased synergies and rolling out more Fresh renovations as well as Price Impact stores.
Further, Haub said that A&P was “primed and ready to achieve sustainable profitability and begin generating free cash flow, which we expect to realize before the end of the fiscal year and continuing into 2009.”
In other A&P news, Sen Chuck Schumer (D-N.Y.) was scheduled to appear at a Waldbaum’s in Jericho, N.Y. this afternoon to speak about farm-fresh produce initiatives being undertaken in the state. Also in attendance will be Rebecca Philbert, A&P’s s.v.p. merchandising and supply & logistics.
A&P operates 446 stores in eight states and the District of Columbia under the following banners: A&P, Waldbaum's, Pathmark, Best Cellars, The Food Emporium, Super Foodmart, Super Fresh, and Food Basics.