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The Great Atlantic & Pacific Tea Co., once the nation’s largest grocer, has filed for Chapter 11 bankruptcy protection as it struggles with enormous debt and increased competition from low-priced peers.
The filing was widely anticipated. The company — known to most as A&P — has been bleeding red ink for some time. According to the filing submitted late Sunday in bankruptcy court in White Plains, N.Y., the company listed total debts of more than $3.2 billion and assets of about $2.5 billion.
A&P, like most grocers, is struggling with the weak economy, reduced spending by consumers and intense competition. The company said aggressive competition from non-traditional food retailers like warehouse clubs, discount chains such as Wal-Mart Stores Inc., and dollar stores have compounded the problem.
The company reported revenue of $9.5 billion in 2008, which fell to $8.8 billion in 2009. And while the 2010 fiscal year is still under way, in its most recent quarter A&P reported that its net loss had doubled as revenue continued to sink.
The company said all of its stores are fully stocked and open for business and loyalty programs and other promotions will continue.
It is also struggling with pension costs, the weight of “dark” stores, where it has stopped operating but is still responsible for the lease and a contract with C&S Wholesale Grocers Inc., which provides the majority of its inventory, which it has been unable to negotiate down to lower costs.
According to the filing, A&P has secured $800 million in debtor-in-possession financing through J.P. Morgan Chase & Co. and will continue to focus on its turnaround plan while under bankruptcy protection. The company has brought in new management, sold 32 underperforming stores since this summer and drastically cut costs. The grocer said it could not complete this process without the protection.
The company’s stock price fell more than 67 percent on Friday and trading was halted in the afternoon.
A&P is one of the oldest supermarket operators in the country. Its first store was in New York City and sold tea, coffee and spices. It expanded across the nation and by the 1930s was the largest grocer in the country.
Copyright © 2010 The Associated Press