A&P Takes Price-Impact to Philly

MARK HAMSTRA

MONTVALE, N.J. — A&P is looking at its new price-impact format as a possible means to revive its struggling operations in its South division.

Last week the company, based here, said it would convert the majority of its SuperFresh stores in the Philadelphia market to the Pathmark Save-A-Center banner, the bargain-focused concept the company debuted at two New Jersey locations in the past month.

“The southern division is very, very weak,” said Karen Short, an analyst with Friedman, Billing, Ramsey & Co., New York. “That's the problem child for the company, so they have to be very focused on figuring out a fix for it.”

She estimated A&P would invest about $1 million per store on the conversions, which are considerably less elaborate than the “Fresh” conversions the company has undertaken at several of its core A&P locations.

The price-impact stores offer a variety of value programs, including more family-sized packages; “Yellow Tag” price reductions; thousands of items on a “Price Hold” EDLP program; and weekly “Power Prices.” The stores also feature a more open layout.

A&P said the 16 existing Pathmark stores in the Philadelphia market also would be converted to the Save-A-Center price-impact format.

The SuperFresh banner includes 76 locations in New Jersey, Pennsylvania, Delaware, Maryland and Washington, D.C. The company said it planned to convert eight SuperFresh stores to Pathmark Save-A-Centers. A&P also told SN five SuperFresh locations in the Philadelphia market would remain and would undergo “significant upgrades.”

In the company's annual 10-K filing with the Securities and Exchange Commission, A&P reported that its South division posted an operating loss of $19.4 million in fiscal 2007, compared with a loss of $1.9 million in fiscal 2006. The decline, the company said, was because of “a more competitive marketplace” as well as losses generated from the purchase of five Clemens Markets in late 2006. Sales in the division were up about 2.2%, to about $1.7 billion.