Great Atlantic & Pacific Tea Co. (GAP) appointed
food-industry veteran Sam Martin as its president and chief
executive as the struggling supermarket operator reported a wider
fiscal first-quarter loss, with sales and the margin weakening.
Shares recently slumped 15.5% premarket to $3.32 as the
quarter's results were short of analysts' expectations.
Martin was most recently chief operating officer at OfficeMax
Inc. (OMX); his departure from there was announced Thursday. Prior
to joining OfficeMax in 2007, he was an executive at Wild Oats
until its acquisition by Whole Foods Market Inc. (WFMI).
Martin succeeds Ron Marshall, who had been CEO of Borders Group
Inc. (BGP) before joining Great Atlantic & Pacific in
January.
The company, which has now reported seven straight quarters of
red ink, has had several challenging years even before the
recession started. Former CEO Eric Claus was replaced as the 2007
Pathmark acquisition continued to weigh on performance.
Executive Chairman Christian Haub said Friday, "Although we are
clearly disappointed with our performance in the first quarter, we
are confident that we now have the right leadership in place to
drive this operational and revenue-driven turnaround effort and
make A&P a great company again."
As many sectors have seen improvement since this year, the
supermarket sector has lagged as customers changed their shopping
habits due to the recession. Supermarket operators have been
cutting prices to attract consumers and analysts believe the change
might be longstanding.
For the quarter ended June 19, the operator of A&P,
Waldbaum's, the Food Emporium and other supermarket chains reported
a loss of $122.6 million, or $4.83 cents a share, compared with a
prior-year loss of $65.2 million, or $3.64 a share. Revenue
decreased to $2.56 billion from $2.79 billion and same-store sales
decreased 7.2%.
Analysts polled by Thomson Reuters most recently estimated a
loss of 70 cents a share and $2.6 billion in revenue.
Gross margin fell to 29.8% from 30.3%.
Standard & Poor's Ratings Services in June downgraded its
junk ratings on the company to highly speculative territory, citing
the supermarket chain's refinancing risk.
-By Jodi Xu and Tess Stynes, Dow Jones Newswires; 212-416-3037; jodi.xu@dowjones.com