Retail News Breaks
A&P chief executive exits, new CEO named
July 23rd, 2010
MONTVALE, N.J. – Struggling supermarket chain A&P has named a new chief executive officer, Sam Martin, upon announcing that his predecessor, Ron Marshall, has left the company after just months in the CEO post.
Also on Friday, the northeastern food and drug retailer reported losses, a dip in revenue and plunging same-store sales for its 2010 first quarter and said it has launched a turnaround plan to fortify its operating and financial foundation and enhance the customer experience.
Martin joins A&P as president and CEO from OfficeMax, where he was chief operating officer since 2007. The supermarket chain said he has more than three decades of management experience in the food retail industry, with increasing operational responsibility.
“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. 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," A&P executive chairman Christian Haub said in a statement. "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 multifaceted effort to make A&P a stronger and more efficient company."
A&P gave no reason for Marshall's exit. He took over the president and CEO role in early February, coming to the company from Borders Group, where he held the same title. Marshall, who also has served as CEO of Nash Finch and chief financial officer of Pathmark Stores (now part of A&P), was hired as A&P's chief executive after a search following the departure of president and CEO Eric Claus last October.
"We thank Ron Marshall for his service and wish him well in his future endeavors," Haub commented.
Before joining OfficeMax, Martin was COO for Wild Oats Markets Inc. through the company's acquisition by Whole Foods Markets Inc. His experience also includes senior management roles at Shopko Stores Inc. and Fred Meyer, A&P said.
"I am thrilled to be joining A&P and to have the opportunity to lead the company's turnaround effort at this important time in its history," Martin said in a statement. "I look forward to working with the board, Christian and A&P's talented associates to quickly execute on the opportunities for improving our performance in the near term and to put the company on a solid foundation for the future.”
According to A&P, the turnaround strategy is designed to generate sustained profitability and cash flow, drive sales growth, restore competitive margins and buttress the foundation of the company for the long term. Through a four-pronged plan, the retailer said it aims to improve its customer value proposition through merchandising; enhance the customer experience and drive clear brand identity; lower structural and operating costs; and implement new financing initiatives to augment first-quarter liquidity of $253 million.
A&P added that besides its revenue-generation and cost-reduction efforts, the company also is pursuing capital-raising opportunities, including incremental financing through its current bank facility, as well as sale-leaseback transactions and the sale of certain noncore assets.
"I am confident that by executing on this far-reaching turnaround under Sam's leadership, we will strengthen the foundation of the company for the long term," Haub stated. "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."
The announcement of the CEO change and turnaround strategy came as A&P posted poor first-quarter results. As of morning trading Friday, the company's stock price was down nearly a dollar to $2.94 per share.
For the 16 weeks ended June 19, A&P's sales fell 8.1% to $2.6 billion from $2.8 billion in the prior-year period. Comparable-store sales sank 7.2%.
The company reported a net loss of $122.6 million, or $4.83 per diluted share, compared with a loss of about $65.2 million, or $3.64 per diluted share, a year before. The average analyst estimate was for a loss of 70 cents per share, according to Thomson Financial.
Excluding nonoperating items, A&P's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $19 million in the 2010 quarter versus $81 million a year earlier. And the adjusted loss from operations was $51 million in the 2010 quarter compared with $4 million in the year-ago period.
For the 2010 quarter, the reported loss from continuing operations was $116 million, which includes charges of $5 million for long-lived asset impairment and income of $8 million for mark-to-market adjustments related to financial liabilities, A&P reported. The company said the loss from continuing operations in last year's first quarter totaled $58 million and included 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," Haub stated. "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."
A&P operates 429 stores under the banners A&P, Waldbaum's, Pathmark, Pathmark Sav-a-Center, Best Cellars, The Food Emporium, Super Foodmart, Super Fresh and Food Basics in New Jersey, New York, Connecticut, Massachusetts, Delaware, Pennsylvania, Maryland, Virginia and the District of Columbia.
More Retail News Breaks >>