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MONTVALE, NJ-The Great Atlantic & Pacific Tea Co.’s aggressive renovation program already is paying dividends, boding well for the dozens of supermarkets to be rehabbed, executives said at the chain’s first-quarter conference call on Friday.

The eight units that have been renovated in the last two quarters to the firm’s A&P “Fresh Market” concept, which emphasizes service departments and produce, have experienced average sales increases of 20%, the chain reported. During the most recently completed quarter, A&P completed six major remodels and 31 minor renovations. It also opened one new Food Basics store in Glassboro, NJ.

“Returns on major and model remodels have exceeded expectations,” said Brenda Galgano, senior vice president and CFO.

The company operates 405 stores in nine states and the District of Columbia under the trade names A&P, Waldbaum’s, the Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-A-Center and Food Basics. About 40 stores will have a major renovation this fiscal year, said Eric Claus, president and CEO. The mini-renovation program is essentially complete.

“We take some of our not too shoppable stores, and make them shoppable,” Claus said. By 2008, 70% to 80% of the company’s store base will be at the new standard.

A new design for the upscale Food Emporium division will open at Manhattan’s Bridgemarket this fall, with two more units to open in New York City and Greenwich, CT, by year’s end or early 2007.

“It will be absolutely spectacular,” Claus said.

Farmer Jack stores in Michigan are being renovated to a hybrid between the discount-oriented Food Basics and Fresh Market formats. Three units will be completed in August, with the balance to be done through the year.

The company also is “aggressively pursuing” disposing of 69 vacant stores, Galgano said. A number could be converted to the Food Basics format.

The company reported US sales for the first quarter of $2.1 billion, compared with $2.2 billion in the first quarter of fiscal 2005. Total US comparable store sales increased 1.5% compared with a year ago.

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