While A&P many not have done much to improve sales or store conditions since it became a privately-held company last March, it seems to have mastered the strategy of many companies controlled by private equity firms: cutting employees.
Earlier this month, the Montvale, NJ-based grocery chain, now controlled by Yucaipa Cos., reportedly riffed about 40 associates. That followed a larger employee trimming effort earlier in the summer, when the Tea Company outsourced some accounting and finance functions to India under an arrangement with consulting firm Wipro, which is based in Bangalore, India.
In this latest round of layoffs, sources told us that four directors – Bill Hendricks, bakery; John Fugazzie, refrigerated and frozen; Ed Ambrose, ethnic; and Scott Della Penna, seafood – were let go.
Additionally, we’re told that other grocery directors will be given added responsibilities that were previously handled by the four men who were dismissed.
In a statement, A&P spokeswomen Marcy Connor said: “We continue to focus on structuring our company to best serve the customers and invest in our stores. To that end, we had to make the difficult decision to eliminate positions at our headquarters office. Though these decisions are not easy, they will position us to be a better company in the future.”
Although A&P has not released much information since they exited Chapter 11 bankruptcy and became a privately-owned firm under the control of Yucaipa Cos. (Ron Burkle, who is the founder of Yucaipa, is also chairman of A&P), company associates and vendors have noted that the once mighty chain has continued to produce poor same store sales results with little noticeable change in store conditions or employee morale.
Of course, having negotiated more favorable labor contracts with its UFCW Locals (clerks and meatcutters) and also gaining an improved distribution and logistics agreement with its primary supplier (C&S), Burkle certainly has more leverage starting his new business venture with a much cleaner and efficient slate.
And with the recent announcement that A&P is putting up its Food Emporium Manhattan stores (16 units) on the sales block, this could be the beginning of future store sell-offs in what many analysts see as a long-term real estate driven strategy.