The Great Atlantic & Pacific Tea Co., better known as A&P, has filed for Chapter 11 bankruptcy protection.
It's been a long slow decline for A&P, which operates grocery stores along the eastern seaboard including Pathmark, Super Fresh, Waldbaum's and Food Emporium. At it's peak in the 1930s, the chain operated nearly 16,000 stores. Today, it has just 395. Sales for it's most recent fiscal year ended February 27, 2010 were $8.8 billion, down from $9.5 billion in 2008. This fiscal year isn't over for A&P, but management indicated losses have doubled for the final quarter of the year so far.It's not unusual for retailers to file for bankruptcy in December or January. Many fiscal years close in February and for publicly-traded companies facing annual losses, management is responsible to shareholders to divulge a pending financial catastrophy.
During difficult years, many retailers try to hang on until the fourth quarter, where most profits are made. By early December, it's usually clear if holiday sales will be enough to rescue a fiscal year and if things are trending up. For A&P, that was clearly not happening.
Among the costs bringing down A&P, are pensions and union contracts as the 151 year old company struggles to compete with discount chains and competitors unburdened by either. It's also been increasingly difficult for retailers to compete with the likes of Walmart and Target, particularly supermarkets, where margins are among the thinnest among all retailers.
A&P announced a turnaround plan earlier this year, one it apparently couldn't carry out under the burden of roughly $3.2 billion in debt, according to the Wall Street Journal.
Last week, TJX Cos. said it would close its A.J. Wright chain, shuttering all 162 stores, two distribution centers and offices. A&P is the latest, but certainly not the last retailer to file for bankruptcy or announce store closures, this year.
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