The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE: GAP) said today that earnings for the 12 week second quarter of fiscal 2000 ending September 9 will be below previous expectations.

Ongoing earnings for the second quarter of 2000 are expected to be in the range of $0.12 to $0.14 per share, versus ongoing earnings of $0.45 per share in 1999. Reported results after special charges associated with the Company's renewal initiatives in both years are expected to be a loss of $0.14 to $0.16 per share in the second quarter of 2000, versus income of $0.14 per share in 1999.

Total sales for the second quarter are expected to increase approximately 7% over the second quarter of 1999, with an increase in comparable store sales of approximately 1.5%.

Christian Haub, President and Chief Executive Officer, said: "We are disappointed with our financial results this quarter, attributable to three factors:

  • While we are pleased that our market shares continue to grow in each of our major markets, the retail food sales environment remains difficult, resulting in comparable store sales growth below our expectations. We expect that the tougher selling environment of the past two quarters will not improve for the remainder of this year. Despite this challenge, we remain committed to maintaining our market positions, and therefore will continue to invest as needed. Thus we anticipate that our current sales and earnings trends will continue throughout the remainder of this year.

  • Our results also reflect a higher than expected SG&A rate, as lower sales reduced our leverage on fixed costs, and as higher utility rates impacted us, especially in New York. In addition, we made several senior management changes during the quarter and our results reflect these reorganization costs.

  • Our recently-built and acquired stores are not delivering the sales and profits that we anticipated. As a result, we are re-examining our capital spending programs, and in addition are modifying our development process to make our capital spending more effective."

Mr. Haub continued, "On a positive note, we made major progress during this quarter on our Great Renewal II initiatives, which continue to run on time and on budget, and we are pleased that the Atlantic Region, which we formed earlier this year, is coming together well. Our recent management changes leave us better prepared for the challenges we face. We remain confident that our strategies will make A&P stronger and more profitable in the long-term."

The Company plans to report second quarter results on Monday, October 2.

Founded in 1859, A&P was one of the nation's first supermarket chains, and is today one of North America's 10 largest. The Company operates in 15 states, the District of Columbia, and Ontario, Canada under the following trade names: A&P, Waldbaum's, Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Kohl's, Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug.

This release contains forward-looking statements about the future performance of the Company, which are based on Management's assumptions and beliefs in light of the information currently available to it. The Company assumes no obligation to update the information contained herein. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements including, but not limited to: competitive practices and pricing in the food industry generally and particularly in the Company's principal markets; the Company's relationships with its employees and the terms of future collective bargaining agreements; the costs and other effects of legal and administrative cases and proceedings; the nature and extent of continued consolidation in the food industry; changes in the financial markets which may affect the Company's cost of capital and the ability of the Company to access capital; supply or quality control problems with the Company's vendors; and changes in economic conditions which affect the buying patterns of the Company's customers.