A&P Sees 2.8% Jump in Q2 Comps

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A&P Sees 2.8% Jump in Q2 Comps

The Great Atlantic & Pacific Tea Co., Inc. posted sales for its fiscal 2008 second quarter for the 12 weeks ended Sept. 6, 2008 of $2.2 billion, vs. $1.3 billion last year. Comparable-store sales grew 2.8 percent, which excludes sales for Pathmark stores acquired in December 2007. Comparable-store sales for Pathmark, measured during the same period, rose 2.9 percent.

For the second quarter, reported net loss from continuing operations was $3.6 million as opposed to a loss of $2.9 million in year-ago period. The prior-year results exclude the results of Pathmark before the date of acquisition.

Sales for the 28-week year to date were $5.1 billion, vs. $3.0 billion in 2007. Comps went up 3.0 percent for A&P and 3.0 percent for Pathmark, when measured during the same period.

Reported net income from continuing operations for the year to date was $0.2 million, compared with income of $58.5 million for 2007, which includes a gain of $78.4 million from the sale of Metro, Inc. shares. As in the second-quarter results, prior-year results exclude the results of Pathmark before the date of acquisition.

"Top-line results and retail fundamentals were quite favorable in all formats," noted A&P president and c.e.o. Eric Claus. "However, even though Price Impact Pathmark stores experienced very strong top-line performance with strong comp-store sales and improved market share, overall earnings were below management expectations, driven by a gross margin shortfall in that format. Most of this shortfall relates to Pathmark transition issues for which corrective actions have already been taken, so that they do not occur again."

Claus and executive chairman Christian Haub both said that despite Price Impact format margin pressure, there was progress during the quarter, in regard to the Fresh, Gourmet, and Discount formats, which all experienced strong top- and bottom-line growth.

Further, according to Haub, the integration of Pathmark remained on track, and A&P realized about $25 million in synergies during the quarter, comprising reduced administrative costs and reduced merchandise costs, as well as reductions in store operating, marketing, and advertising costs. At the end of its second quarter, A&P's run rate of synergies was about $120 million, or about 80 percent of its original target of $150 million.

In response to the faltering economy, A&P has shifted more capital dollars toward Discount and Price Impact conversions, refreshes, and new store initiatives, added Haub, noting that, given the current state of the credit markets, the company has reined in capital spending for the rest of fiscal 2008.

Montvale, N.J.-based A&P operates 445 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.