A&P TO LEAVE MILWAUKEE MARKET

David Ghitelman

MONTVALE, N.J. -- A&P here said it will close all 23 remaining supermarkets operated by its Milwaukee-based Kohl's Food Stores subsidiary on or about Aug. 16.

The company also said that last week, all 105 stores operated by its Detroit-based Farmer Jack Food Market closed for 37 hours and then reopened with "a fresh new atmosphere focused entirely on customer service and fresh-food products."

A&P first said it was looking for a buyer for the Kohl's stores in February, when it sold 16 Kohl's units in the Madison, Wis., market area to Roundy's, Sheboygan, Wis., which proceeded to reflag them with its Copps Food Stores banner.

A&P did have a prospective buyer for the remaining Kohl's stores, an industry source told SN, but the deal fell apart. The source said A&P now expects to sell the stores after they have been closed.

Daniel Welch, president, United Food and Commercial Workers Union Local 1444, Milwaukee, which represents most of Kohl's Milwaukee employees, told SN that he expects some of the newer Kohl's stores may ultimately be sold to other supermarket companies, but even if many of the older, long-unprofitable units are sold, they are likely to be acquired by nonfood retailers.

He noted that when A&P acquired the Kohl's chain in 1983, store workers made "significant concessions" to the company. "It was millions of dollars -- in pay and paid time off -- that they gave back."

On Wall Street, the news of the store closings and reformattings was more favorably received. Karen Miller, a high-yield bond analyst at Bear Stearns, New York, said, "From a credit standpoint, we like that they are selling assets."

She also observed that reformatting the Farmer Jack stores will "maybe put them in a better position."

However, she cautioned that A&P's strategy of "sacrificing gross margin to grow market share" could lead to "a downward spiral."