The Great Atlantic & Pacific Tea Co., better known as A&P, filed for Chapter 11 bankruptcy Monday in U.S. Bankruptcy Court for the Southern District of New York - its second such petition in five years.
The Montvale, N.J.-based company currently operates 296 stores, primarily in the highly competitive northeastern U.S. market, under the banners of the Pathmark, Super Fresh, Food Basics, A&P, Best Cellars, Food Emporium, and Waldbaum's chains.
For now, business at those stores will continue as usual, A&P said in a statement Monday.
In the coming months, however, the company will shutter 25 unprofitable stores. Ten are Pathmark and Super Fresh supermarkets in the Philadelphia region, the company said - locations as diverse as Berwyn and Folsom, Center Square and Northeast Philadelphia.
The company did not give a specific time frame.
The announced closures are part of a larger corporate restructuring that includes asset-purchase agreements covering about 120 stores at a price of about $600 million, the company statement said. A spokesman for A&P declined to give information beyond what was contained in the statement.
United Food and Commercial Workers International Union, which represents workers at A&P's supermarket chains, said in a statement on its website: "For decades, the dedication and sacrifices of hard-working UFCW members have been instrumental in keeping A&P's doors open. Every day, they have shown their commitment to their job, their coworkers, the community, and this union family. As difficult as this bankruptcy process is, our message to A&P is a simple one - we expect A&P to do what is right by members and their families."
UFCW represents 72.5 percent of union-represented employees at A&P. Of the estimated 28,467 full-time and part-time employees, about 93 percent, or 26,425, are union-represented, according to the bankruptcy filing.
The union is hoping that other, better-managed supermarket chains will buy the struggling Philadelphia-area stores so employees can keep their jobs, said Wendell Young IV, president of UFCW Local 1776.
The workers are anxious and frustrated, Young said. "The people have been loyal to the company; they feel somewhat betrayed that A&P didn't better manage and run these stores," he said.
In the bankruptcy filing, A&P said it would continue to pay employee benefits. Young said he hoped the bankruptcy judge would give the needed authorization.
"Unfortunately, the bankruptcy process doesn't always put the workers' interests at the top of the list," he said. "Creditors are placed first. That's terribly wrong."
The filing by the venerable grocery company, founded in New York in 1859, came as a surprise to Burt Flickinger, managing director of retail consultant Strategic Resource Group in New York City.
"A&P has some of the best locations anywhere in America, and some of the stores had been doing some of the highest sales per store of any food and drug combination stores in America," he said.
Flickinger attributed A&P's troubles to poor supply-chain procedures, corporate management and hiring practices.
He said he heard from staff members that goods would arrive late, costing overtime wages for the unloading crew, or come to the stores damaged. Sometimes, they would not arrive at all. Often, A&P would not pursue its suppliers for credit or to patch the lapse, he said.
In the 2010 bankruptcy, A&P hired Jake Brace as its chief restructuring officer, a move Flickinger said only exacerbated the company's problems. Brace, who previously worked for United Airlines, left less than two years into the job.
"He didn't understand the rhythm of retail," Flickinger said.
Looking at A&P's history, Flickinger said, he was optimistic about its future.
"About 15 to 20 years ago," he said, "A&P stores at their peak generated $40 million to $50 million in sales per store per year when the average supermarket in the U.S. typically generated $9 million."
A&P needs better contracts with suppliers and better talent, Flickinger said.
Stores that are closing:
Of the 296 supermarkets A&P operates under a variety of names, those that will close locally are:
840 Cottman Ave., Philadelphia
85 Franklin Mills Blvd., Philadelphia
450 W. Swedesford Rd., Berwyn
420 McDade Blvd., Folsom
3901 Lancaster Ave., Wilmington
2105 Philadelphia Pike, Claymont, Del.
1256 Indian Head Road, Toms River, N.J.
1851 S. Columbus Blvd., Philadelphia
1301 Skippack Pike, Center, Square
863 E. Baltimore Pike, Kennett Square