Great Atlantic & Pacific Tea Co Inc, owners of the storied A&P grocery chain, has filed for bankruptcy protection for the second time in five years. The company has also announced plans to sell more than one-third of its remaining stories.
The chain, which also owns Best Cellars, Pathmark and Superfresh stores, has watched profits shrink over the last several decades as low-cost discounters such as Wal-Mart Stores Inc. have edged out the company’s pricing and stole many of its once-loyal customers. As I previously reported, A&P has also been hurt by the likes of up-market grocery chains such as Whole Foods Market Inc and Fresh Market, which offer organic and GMO-free items to product conscious consumers.
At the peak of its thriving business model, A&P operated more than 15,000 stores. In 2010 the company filed for bankruptcy and emerged two years later as a private company with financing from Goldman Sachs. The company has received significant investments from billionaire Ron Burkle.
A&P now operates just 296 stores with assets and liabilities of more than $1 billion listed in its Chapter 11 filing.
The company also announced on Monday that it will sell approximately 120 stores at a price of $600 million. The company has not named the buyer. A&P will also close 25 stores because of “lack of interest” in certain markets.
Among a potential list of buyers are Acme Markets Inc, owner of Safeway and Albertsons grocery stores, Shop & Stop Supermarket Co LLC, and Key Food Stores Co-operative Inc.
A&P has hired Evercore Partners, an investment bank that specializes in selling assets.
The Montvale, New Jersey-based company employs approximately 28,500 employees, including 20,000 who are part-time, with an average hourly wage of $16.85. The company has blamed 12 different unions for constantly using their bumping rights to put pressure on the company’s attempts to turn around operations.
A&P has lined up $100 million debtor-in-possession financing — a loan that allows the bankrupt entities to access capital while under court supervision.
In a statement, A&P CEO Paul Hertz described the bankruptcy and store closures as the right decision to “preserve as many jobs as possible” and “maximize value for all stakeholders.”
“While the decision to close some stores is always difficult, these actions will enable the company to refocus its efforts to ensure the vast majority of A&P stores continue operating under new owners as a result of the court-supervised process,” Hertz said. “We greatly appreciate the continued support of our customers, suppliers and employees, who have maintained an unwavering commitment to our business and our customers.”
You can follow the case in U.S. Bankruptcy Court, Southern District of New York, Case No: 15-23007.