A&P RIP?

The great Atlantic and Pacific Tea Company continues its slide into the abyss-and it, along with our old nemesis Pathmark that had been acquired two years ago, doesn't appear to have many breaths left. It couldn't be happening to a better caste of scoundrels. Four years ago, we were retained by the Pathmark company prior to its acquisition for the purpose of stopping thew building of a Wal-Mart Supercenter in Monsey, NY. We stopped the Walmonster dead in its tracks.

But, recalling the old adage that no good dead goes unpunished, the newly acquired pallbearers of Pathmark decided that they didn't have to pay us-or its workers, for that matter-what they owed for saving a high grossing unit right next to the proposed Wal-Mart. One particular low life, someone named Allen Richards, was the man in charge and we eagerly await news of his deserved sacking-a man of limited talents, and even more limited integrity.

Karma is a bitch, isn't it? But we digress. It now appears that it won't be long before leaner4 and meaner competitors tear off pieces of the carcass that was once that of the great A&P. As Crain's reported last week: "The financial free fall of The Great Atlantic & Pacific Tea Co.—owner of A&P, The Food Emporium, Pathmark, Waldbaum's and other chains—has its local rivals salivating. “We are just observing right now,” insists billionaire John Catsimatidis, who owns the Gristedes chain. But industry-watchers say the one-time mayoral candidate is keen to take over some of the ailing supermarket giant's real estate. So, too, are at least a half-dozen others, including Fairway Market's co-owner, Howard Glickberg. “If Food Emporium came up for sale, it would be a real estate opportunity for us,” says Mr. Glickberg, whose company is rapidly expanding in the area."

It won't be long, yeah: "In fact, an implosion of 151-year-old A&P could be a windfall for its competitors. Buildings large enough to accommodate supermarkets are scarce and highly sought-after in the city. A&P's five-borough portfolio of 48 such properties under the Waldbaum's, Food Emporium, Pathmark and A&P banners is one of the largest in the city. The Montvale, N.J.-based grocer has a total of 429 stores across eight states in the Northeast."

Paging Allen Richards, the Titanic needs you: "Once one of the most-admired food retailers in the country, with more than 15,000 stores in its heyday in the 1930s, A&P has been struggling for many years, but it was caught completely flat-footed over the past decade as newer competitors like Whole Foods Market and Trader Joe's redefined the supermarket business. Over the past 12 months, A&P has replaced two chief executives. A third, Sam Martin, was appointed late last month. A former chief operating officer of OfficeMax and Wild Oats Markets, respectively, Mr. Martin has a herculean task ahead of him. The company has lost money for seven straight quarters. In its most recent fiscal quarter ended June 19, the grocer reported a loss of $122.6 million, compared with a loss of $65.2 million in the same quarter of 2009."

Poetic justice, you might say, for the company that kinda invented the anti-trust laws back in the day. In recognition of its market power-and the concomitant ability to destroy other competitors-Congress passed the Robinson Patman Act to curtail A&P' growing influence: "Congress felt that the rise of chain stores1 threatened competition in the retail sector. Through vertical integration and the buying power of multiple locations, large retailers could obtain significant price concessions from their suppliers that were not available to smaller competitors. The Robinson-Patman Act was envisioned to provide protection to small independent retailers and suppliers such that "to the extent reasonably practicable, that businessmen at the same functional level would stand on equal competitive footing so far as price is concerned." In very broad strokes, the Act requires sellers to sell to everyone at the same price, and buyers buy from a particular seller at the same price as everyone else, where they have the knowledge to do so."

And now, the once great retailer is being auctioned off at the equivalent of a yard sale: "In late July, Standard & Poor's lowered the company's credit rating to deep into junk territory, CCC, because it has too little cash on hand. “While many supermarkets have experienced profit pressures over the past year, performance at A&P has generally been worse than industry averages,” wrote S&P analyst Charles Pinson-Rose. Mr. Flickinger predicts that the company could face a cash crisis by next February. An A&P spokeswoman says the company's turnaround plan includes the sale of noncore assets, and that's exactly what has its competitors salivating. Some observers suggest that A&P may sell off Food Emporium. That chain boasts 16 Manhattan stores. Mr. Flickinger notes that they are the most upscale in the company's portfolio and are outperforming its other brands.

And, as analyst Flickinger goes on to point out: “A&P should sell its weakest operating companies, but its history is to sell its crown jewels,” he says. In 2005, it did just that, selling its highly successful A&P Canada subsidiary to help it pay down debt." Where do we get in line for our piece of that debt?

Sill, as much as all of this creates a certain amount of schadenfreude, we must point out that there are good union jobs at stake-a concern at any time, but especially during the current recession: "At this point, the situation is so dire that union officials are worried. “We are concerned about stores closing, layoffs and the lack of customers,” says John Durso, president of Local 338, which represents 7,000 A&P, Waldbaum's and Food Emporium employees."

So while we have a personal reason to gloat about all of this, we do feel that it is important for those looking to pick up the A&P pieces-like John Catsimatidis-to do so; and save the jobs along with the neighborhood supermarkets that are becoming all too rare in NYC