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The Great Atlantic & Pacific Tea Company Reports Operating Results (10-Q)

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gurufocus
Jan 18, 2012
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The Great Atlantic & Pacific Tea Company (GAP, Financial) filed Quarterly Report for the period ended 2011-12-03.

The Great Atlantic & Pacific Tea Company has a market cap of $657.11 million; its shares were traded at around $0 .

Highlight of Business Operations:

Our Store operating, general and administrative (“SG&A”) expense was $499.6 million or 31.80% as a percentage of sales for the third quarter of fiscal 2011, as compared to $635.6 million or 35.43% as a percentage of sales for the third quarter of fiscal 2010.

Excluding the items listed above, SG&A as a percentage of sales decreased by 93 basis points during the third quarter of fiscal 2011 as compared to the third quarter of fiscal 2010. Labor and occupancy costs decreased $31.8 million and $27.2 million, respectively, primarily attributable to a reduction in the number of open stores. The corresponding rates as a percentage of sales increased 37 basis points and decreased 50 basis points, respectively, due to the closing of underperforming stores with higher costs relative to sales from our remaining open store base. Advertising and other operating expenditures decreased $15.1 million, or a decrease of 42 basis points as a percentage of sales. In addition, other miscellaneous expenses, as well as corporate and store related costs not allocated to segments, decreased $11.8 million primarily attributable to reduced benefits, occupancy and labor expenses, or a decrease of 38 basis points as a percentage of sales.

Segment loss increased $10.5 million from a loss of $10.1 million for the 12 weeks ended December 4, 2010 to a loss of $20.6 million for the 12 weeks ended December 3, 2011. Segment income from our Fresh segment decreased by $0.1 million primarily attributable to lower sales partially offset by reduced labor, advertising and occupancy expenses. The Pathmark segment experienced a segment loss increase of $9.5 million primarily attributable to a decline in ongoing open stores of $19.3 million, partially offset by reduced labor and occupancy expenses due to store closures. Segment income from our Gourmet business and Other segment, representing Discount and Wine, Beer and spirits, declined by $0.8 million and $0.2 million, respectively, attributable to lower sales and gross margin. Refer to Note 23 – Reportable Segments for further discussion of our reportable operating segments.

Our SG&A expense was $1,795.2 million or 33.00% as a percentage of sales for the 40 weeks ended December 3, 2011, as compared to $2,087.8 million or 33.26% as a percentage of sales for the 40 weeks ended December 4, 2010.

Segment loss increased $88.5 million from a loss of $29.1 million for the 40 weeks ended December 4, 2010 to a loss of $117.6 million for the 40 weeks ended December 3, 2011. Our Fresh and Pathmark segments experienced segment income declines of $42.8 million and $43.5 million, respectively, primarily attributable to decrease in income from ongoing open stores of $59.9 million and $68.3 million, respectively, partially offset by improvements in labor and occupancy expenses along with reduced advertising expenses due to store closures. Segment income from our Gourmet business and Other segment, representing Discount and Wine, Beer and Spirits, decreased by $1.8 million and $0.5 million, respectively, primarily driven by decreases in sales and gross margin. Refer to Note 23 – Reportable Segments for further discussion of our reportable operating segments.

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