MONTVALE, N.J. -- A&P here said last week it plans to concentrate capital spending in three of its most successful markets while also considering the possibility of closing additional underperforming stores this year.
Christian Haub, president and chief executive officer, said the company will concentrate new-store expansion in Canada, where comparable store sales rose 7.5% last year; in the Detroit area where Farmer Jack is based, and in the New York metropolitan area -- "markets where we're seeing our greatest success, with the greatest potential for future success."
However, he said A&P has been disappointed with the performance of stores in other areas and is considering closings that it had not initially anticipated.
When A&P closed 143 stores in 1999 as part of the first phase of its Great Renewal strategic initiative, Haub said he anticipated the closings would be a one-time event. "But as we look at our store base, there will always be a number of stores that are underperforming, and we need to get those out of the system, and closing such stores may be an ongoing process for us," he said.
According to Haub, the inability of some of A&P's newest stores to perform up to desired levels may be due more to overall shortcomings in execution than linked to the individual stores themselves, "and as we seek to raise those levels, we also hope it will improve stores that are underperforming."
Haub made his remarks during a conference call with industry analysts to discuss financial results for the year and fourth quarter ended Feb 24, which showed sales increasing but earnings declining.
Sales for the year rose 4.7% to $10.6 billion and comparable store sales rose 2.2% -- including 1.8% in the U.S. and 7.5% in Canada -- while net income, excluding special items related to the company's Great Renewal initiatives, fell 74.3% to $19 million. For the 12-week quarter sales increased 5.5% to $2.6 billion and comps were up 2.8%, while net income, excluding the special items, dropped 87% to $2.5 million.
The special items related to A&P's efforts to transform the supply chain and business processes, which totalled, on an after-tax basis, $44.1 million, or $1.15 per share, for the year and $13.3 million, or 35 cents per share, for the quarter.
Haub said A&P anticipates it will show break-even earnings this year -- essentially 0 cents per share -- compared with a loss of 65 cents per share, including special charges, for the year just ended.