A&P Files for Bankruptcy Protection
| published July 22, 2015 |
By Thursday Review staff
The iconic grocery store chain A&P—also known as the Great Atlantic & Pacific Tea Company—has again filed for bankruptcy. A&P completed its Chapter 11 filings in the U.S. Bankruptcy Court, Southern District of New York. In its documents and papers, the company said that it was in discussions with multiple buyers for some of its stores.
A&P listed the value of its assets at more than $1 billion, and said it has hired the investment firm Evercore Partners to facilitate the sales of some of its retail locations, warehouses, and distribution centers. This is the second time in five years that A&P has filed for Chapter 11 protection.
A&P, which is more than 150 years old, has faced a rocky stretch the last few years. It has been consistently unable to adjust and adapt to a rapidly changing grocery store marketplace since the beginning of the aught years, and it has fallen behind its biggest competitors—Publix, Harris-Teeter, Bi-Lo, and Winn-Dixie—and the grand old chain has also been clobbered by the mega chains such as Wal-Mart, Target, and Costco.
Wal-Mart has been especially tough on A&P for decades, and in some markets the Bentonville, Arkansas-based giant is believed to have very nearly deliberately killed off A&P singlehandedly by undercutting dairy and meat products to below cost, a tactic often used by Wal-Mart to usher out competition from smaller retailers. This has effectively rerouted the A&P's middle income and low income shoppers looking for bargains at the superstores. But A&P has also faced an uphill battle against the surge of health-conscious stores and the upscale grocery operations, such as Whole Foods and Fresh Market.
A&P, which also owns Best Cellars and Pathmark stores, says it is negotiating with the parent company of Safeway and Albertsons for the sale of some locations, but it may also sell off parts of its retail operations to other buyers as well. The announcement does not make clear how many stores it intends to continue to operate under the A&P name, but business analysts say it should be able to quickly sell at least 120 of its total of 296 grocery store locations for a total of $600 million in cash.
Ironically, A&P was founded in 1859 as a mail order operation, a sort of amazon.com for food. It sold tea, coffee and spice, and had the items delivered by postal workers or other delivery means right to the door of homes and businesses. Later it became a retail grocery store chain, and at its zenith operated more than 15,000 stores in almost every state and major city.
A&P, which is headquartered in Montvale, New Jersey, first filed for bankruptcy protection in 2010. It currently employs 32,150 people.
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