A&P Hopes For '07 Profits

MONTVALE, NJ-The Great Atlantic & Pacific Tea Co. Inc. said it will spend about $200 million this fiscal year to renovate 74 stores as the grocery chain moves forward with its goal to achieve overall profitability in fiscal 2007.

Company officials said the locally based chain completed four major renovations and six minor remodels during the quarter ended Sept. 9, spending $52 million in capital upgrades for the period.

News of the expenditures comes as the grocer, the parent company of the A&P supermarket chain, faced a second-quarter sales slowdown caused by extreme summer weather that resulted in a quarterly net loss of $511,000, or one cent per share.

Last year, the company reported a second-quarter gain of $592 million, or $14.40 a share, which included a $919.1-million gain from the sale of A&P Canada. The chain, which operates 404 stores in nine states and the District of Columbia under eight different banners, including A&P, Waldbaum’s, The Food Emporium, Super Fresh, Farmer Jack, and Sav-A-Center, is forging a turnaround through cost control and sales development strategies designed to improve operations, the company said.

Christian Haub, the firm’s executive chairman, said he expects that strategy to pay off in improved performance that will lead to overall profitability in fiscal 2007. In a conference call with investors and analysts, CFO Brenda Galgano said severe summer weather, including flooding in the Northeast, impacted sales during the quarter, causing total sales to drop to $1.57 billion, down from the previous year’s $2.2 billion, which included $600 million from the chain’s divested Canadian stores.

Excluding that income, US sales dipped to $1.57 billion from $1.6 billion for the prior year’s quarter. Sales at stores open at least a year were up slightly at 0.2% but were down in the first five weeks of the third quarter, due primarily to increased sales in the third quarter of 2005 following Hurricane Katrina, Galgano said.