business news in context, analysis with attitude

• The Great Atlantic & Pacific Tea Co. (A&P) said yesterday that it is asking for permission from the bankruptcy court overseeing its finances to close 14 stores in four states.

CEO Sam Martin said in a prepared statement: “We are continuing to take the steps necessary to position A&P to emerge from Chapter 11 with a strong future and ensure that we remain focused on our top priority - providing great value and service to our customers every day. As part of our preparations to emerge from Chapter 11, we have decided to close these 14 underperforming locations. While this was a very difficult decision that will unfortunately impact some of our customers, partners, associates and the surrounding communities, these actions are absolutely necessary as we continue to strengthen A&P's operating foundation and improve our performance."

• The Orange County Register reports that Tesco-owned Fresh & Easy Neighborhood Markets said that it plans to close 12 underperforming stores - temporarily.

According to the company, the stores will remain shuttered until economic factors make it sensible to reopen them. And, the company said, it will continue to open new stores - some of them in the same markets where it is closing stores - where circumstances warrant, though the new stores are likely to be smaller Fresh & Easy Express format stores of about 3,000 square feet.

Tesco has been saying that it is remains on track to reach break-even with the Fresh & Easy business during the 2012-2013 fiscal year.
KC's View:
My normal default position would be to say that this is a smart decision by Fresh & Easy, and a harbinger of bad things to come for A&P.

But not this morning. I had an interesting conversation with a senior A&P exec last week, someone reasonably new to the company and with great credentials and credibility. And this person made the argument - persuasively - that the company is turning the corner, and that there is a light at the end of the tunnel that is not an oncoming train. As I said, this person was persuasive ... so I’m going to give A&P a break this morning.

As for Fresh & Easy....I’ve never heard of a temporary closing of 12 stores. I still think they’re going to make it long-term, but it’s not going to be easy.