Inside This Issue - News
A&P changes CEO
August 2nd, 2010
MONTVALE, N.J. – In its latest executive suite shuffle, A&P has named Sam Martin president and chief executive officer, replacing Ron Marshall, who had held the positions for just over six months.
At the same that the troubled grocer announced the change, it revealed dismal first quarter financial results that included plummeting same-store sales and a net loss that nearly doubled.
Martin had been executive vice president and chief operating officer at OfficeMax Inc. since 2007. Prior to that he was COO for Wild Oats Markets Inc. through its acquisition by Whole Foods Market Inc. Earlier in his career he served stints at Shopko Stores Inc. and Fred Meyer Inc.
"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," executive chairman Christian Haub said in a statement.
"As we moved to the implementation and execution stage of the 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," Haub explained. "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."
Haub had been similarly enthusiastic about Marshall when he announced the latter’s appointment in late January, touting his grocery retailing experience and familiarity with the food retailing market in the Northeast. Marshall had been executive vice president and chief financial officer at Pathmark Stores Inc. before its acquisition by A&P, and president and chief executive officer at Borders Group.
In early May, when A&P announced a fiscal 2009 loss from continuing operations of $780.7 million, Marshall was straightforward in describing to analysts the company’s ills, which he said were “systemic, deep and profound.” He specified a lack of brand identity in the company’s main banners, the incomplete integration of its Pathmark acquisition and “opportunities for significant cost improvements.”
The four key elements of the turnaround strategy unveiled with the Martin appointment echo Marshall’s analysis:
• Improve the company’s customer value proposition through merchandising.
• Enhance the customer experience and drive clear brand identity.
• Lower structural and operating costs.
• Implement new financing initiatives to augment first quarter liquidity of $253 million.
A&P’s first quarter results paint a darkening financial picture that casts doubt on the turnaround strategy in which Haub expressed such confidence. Sales fell 8.1% to $2.56 billion as comparable-store sales tumbled 7.2%.
The operating loss ballooned to $62.6 million from $1.84 million, as gross margin fell 50 basis points to 29.78%. A&P’s loss from continuing operations nearly doubled to $115.6 million from $58.3 million.
"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," commented Haub. "We are focused on improving our customer value proposition as well as significantly reducing our structural and operating costs."
With the retailer’s top line continuing to shrivel, liquidity concerns appear to be rising, as management announced it is pursuing capital-raising opportunities that include incremental financing through its current bank facility and sale-leaseback transactions as well as the sale of noncore assets.