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A&P reportedly considering bankruptcy
December 10th, 2010
NEW YORK – A&P shares sank more than 60% on Friday amid published reports that the struggling food and drug retailer was on the verge of filing for bankruptcy protection.
A report by Bloomberg on Friday said A&P was considering filing for Chapter 11 bankruptcy and that such a move could take place as soon as in the next several days.
The report set off a wave of media speculation on whether bankruptcy was imminent for the venerable retailer, sending its share price down about 65% to $1.00 as of noon trading on Friday. An A&P spokesperson couldn't be reached for comment.
Financial journal Barron's reported later Friday afternoon that trading of A&P shares had been halted. At that point, shares were down 67% to 93 cents. They closed at $2.83 on Thursday.
A&P operates 374 supermarkets under the A&P, Pathmark, Super Fresh, The Food Emporium and Food Basics banners in New York, New Jersey, Connecticut, Pennsylvania, Delaware, Massachusetts, Maryland, Virginia and Washington, D.C. It has 251 pharmacies under the A&P, Pathmark, Waldbaum's, Super Fresh and Food Basics banners.
The Montvale, N.J.-based company is the 25th-largest pharmacy operator by pharmacy count and the 31st-largest by pharmacy dollar volume, estimated at $582.3 million, according to 2010 Annual Report of Retail Pharmacy by Chain Drug Review, a sister publication of MMR.
When reporting second-quarter results in late October, A&P's management gave an update on the company's turnaround plan. Key points included installing new management and bolstering liquidity — the most immediate concern — as well as reducing structural and operating costs, improving the A&P value proposition to customers, and enhancing the in-store experience for customers. The company also has closed and sold off stores.
But in its 10-Q filing with the Securities and Exchange Commission for the quarter, A&P stated that "there is uncertainty regarding whether our company can complete all or a portion of these efforts and, if these do not occur, there is substantial doubt about our company's ability to continue as a going concern."
A&P reported a 7.1% drop in revenue to $1.92 billion for the second quarter, with same-store sales falling 6.6%. Its reported net loss jumped 91.4% to $153.7 million, or $2.95 per share.
During the conference call on the second quarter, chief executive officer Sam Martin — who took the helm this summer with the exit of Ron Marshall after just months as CEO — was blunt in his assessment of A&P’s operational performance. "In terms of our abilities in this company, all the way down to category management and store operations, we have been mediocre at best in the recent past," Martin stated. "We have a lot of room to grow, and we're focused on what we do, how we do it, how we're accountable for the results, and on the customers we have today and the customers we plan to attract in the near and long-term future."
Editor's Note: Article updated on Dec. 10 with news on halt to trading of A&P shares and latest share price.