MONTVALE, N.J. -- A&P suggested some big announcements were on the way at its annual shareholders' meeting here last week.
Christian Haub, A&P's chairman and chief executive officer, said the company's strategic restructuring was on track to be completed by the end of its fiscal year in February.
Initiatives as a part of that restructuring include the divestiture of A&P's Farmer Jack division in Michigan and the potential sale of its stores in Canada. A&P said both units were up for sale in May, but added it could hold onto all or parts of its profitable Canadian division if an acceptable deal could not be reached.
Analysts told SN they expected an announcement on Canada could have come as early as last month.
A&P's strategic plan also calls for cost reductions and investment behind fresh and discount formats in A&P's core Northeast markets, Haub said.
A significant aspect of the restructuring did begin last week when C&S Wholesale Grocers, Keene, N.H., began to take over grocery distribution for A&P. The switch to outsourced distribution will be complete this fall, Haub told shareholders, adding that the moves improve buying and distribution efficiency and will generate annual cost savings of $40 million.
Haub outlined accomplishments in 2004, noting improved performance in the U.S. and Canada, including the launch of A&P's fresh merchandising concept at select locations. Known as Fresh Market stores, the concept emphasizes service and presentation of perishables and floral items.
Haub said Fresh Market stores incorporate "best-of-class" elements from fresh food retailers across North America. Describing the stores in a conference call last year, Haub said "It's more than just a new look and more upscale products. It's a comprehensive concept evolution."
The strategic plan calls for money generated from asset sales to pay down debt and accelerate the rollout of such stores, Haub said. Other stores would be redeveloped to the discount Food Basics banner. Those stores, focused on low-cost operations and low prices, are targeted mainly for urban and ethnically diverse locations, Haub said.
Those two concepts will make up the core of the "new A&P," which will operate approximately 325 stores and generate around $5.8 billion in annual sales, Haub said.
A&P's 650 stores generated around $11.9 billion in sales during fiscal 2004.
A&P's other accomplishments in 2004 included the settlement of a class-action lawsuit brought by some franchise owners in Canada, which resulted in A&P purchasing those stores, Haub said.
The company also decided to undertake a restructuring, identifying $75 million in cost reduction opportunities. In December, the company said it would eliminate redundant staffs at each of it banners and centralize marketing, merchandising and other functions in Montvale.
The changes, along with the speculation on the sale of assets in Canada and the U.S., has resulted in good days for A&P shareholders. The stock is among the largest gainers on the New York Stock Exchange, climbing from less than $6 a share late last year to more than $30 this month. It closed last Thursday at $29.69.
