Taking Stock

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Is The Final Chapter For A&P Imminent? 

Sam Martin. Nice guy. Assessing his talent is another matter. If you’re looking simply at his body of work in the 42 months he led A&P, you’d have to say his performance was poor, and perhaps that’s why Martin joined the “excised” list of other of failed Tea Company executives who have held the CEO mantel over the past 15 years.

As recent history shows, A&P doesn’t really need a reason to fire key executives or go through frequent reorganizations. Things seemingly happen randomly in Montvale, NJ and virtually all the time the results are the same. Failure (“…meet the new boss, same as the old boss”).

In this case, the new boss is Greg Mays, a man with plenty of grocery industry experience, and one whose chances of restoring A&P’s image as a significant retailer are about as good as if I were to replace A-roid as the Yankees’ next third baseman. And, according to the company, it is seeking to fill the chief executive slot with somebody new sometime in the future. I would say that whomever A&P hires, that person should look at the CEO job as primarily a temporary money grab, because that individual has no chance of being a game changer either.

So, while Sam Martin wasn’t the reincarnation of A&P founder George Huntington Hartford or Pathmark’s co-founder Herb Brody, don’t blame him for The Tea Company’s recent miseries. That horror show has been playing daily in Montvale for more than 30 years.

What’s made this recent blow-up more notable is that new owner private equity firm Yucaipa Cos. (which gained controlled of A&P as a private company following its March 2012 exit from bankruptcy) promised much more.

While most of us knew that Yucaipa’s main incentive for acquiring A&P was to gain control of its valuable real estate along with an ability to utilize the retailer’s significant cash flow, there were also promises made and concessions granted. The promises: invest more capital to build new stores and refurbish others that were in dire need of remodeling and to take better care of its associates. The concessions: for those store level associates who were going to be treated better (or so they thought), they would have to sacrifice some wages and benefits so the new management at A&P could better attain its goals. Also providing concessions was C&S Wholesale Grocers, the chain’s largest supplier, which agreed to provide distribution and logistics services at a lower cost.

Twenty-two months after A&P’s bankruptcy ended, Yucaipa has shown its true colors. Sure, it received the benefits of A&P’s real estate portfolio (including the Food Emporium units in Manhattan) and has no doubt taken advantage of tens of millions of dollars in weekly cash flow to help subsidize other businesses, but as a merchant and as a “good employer,” A&P’s perception is even worse than what many believed was the nadir when the chain entered Chapter 11 in December 2010.

Yucaipa has accomplished most of its mission already. Now it seems the final chapter is at hand. With rumors swirling that several blocs of stores will soon be sold (apparently financial investment advisor Credit Suisse couldn’t find a single buyer to wholly acquire the semi-dilapidated retailer), all that’s left are the final steps toward closure.

Whether it’s barely breathing today or clinically dead in 12 months, RIP A&P.