MONTVALE, N.J. -- A&P said results in Ontario and Atlanta led to decreased sales and earnings for the first quarter ended June 18.
Income before the effect of an accounting change totaled $7.2 million in the 16-week quarter, down 58% compared with net income of $17.1 million in last year's first quarter.
Sales fell 1.6% to $3.23 billion. Same-store sales at U.S. stores rose 1.1% after adjusting for the effect of a three-week strike by competitors in New Jersey in 1993, A&P said.
Same-store sales in Canada were negative for the quarter -- securities analysts estimated the decline at between 3% and 4% overall and 10% in Ontario -- following a 14-week strike in Ontario during which the chain's 63 Miracle Food Mart and Ultra Food Mart stores were closed. "But by the end of the quarter, Miracle Food Mart stores had regained 90% of their pre-strike sales levels," A&P said.
James Wood, chairman and chief executive officer, said A&P's combined earnings from U.S. operations, excluding Atlanta, exceeded last year's first-quarter result.
"In Canada, we continue to invest to recapture our Miracle Food Mart business, which was interrupted by the recent strike, while we also work to achieve an appropriate cost structure in labor and every other element of our business," Wood said.
Debra Levin, a securities analyst at Morgan Stanley, New York, said A&P's loss was due to "pressures on margins and sluggish sales overall, particularly in Ontario.
"The majority of the dropoff from a year ago is due to the situation in Ontario and the rest is due to the very competitive situation A&P faces in Atlanta, where its store base is not as strong as the store base of competitors like Publix, Kroger and Winn-Dixie, all of whom have invested more money there," she said.
Ed Comeau, a securities analyst with Lehman Bros., New York, said A&P's declining results during the quarter mark 13 consecutive quarters of earnings declines, which, he said, is unprecedented in the industry since the 1970s.
"And it's hard to see where the deterioration will stop," he said. "A&P has experienced an earnings drop of $70 million to $100 million in Canada over the past couple of years, and while I believe that the decline will slow, given the resolution of its labor situation there, I don't expect A&P to make money in Canada for at least a couple of years."