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Wild, Wild Midwest


MONTVALE, N.J —After over two years of consideration, A&P is finally selling off its 66-unit Farmer Jack operation in the Midwest in a deal that, it appears, will break up the division among multiple purchasers.

A & P anticipates the sale of store groups to selected bidders, it stated, an acknowledgment that rumors about a breakup were coming true. A&P will reveal purchase details as definitive acquisition agreements are reached, a process that is expected to take several months. A&P shopped the Midwest division around when it unloaded its Canadian operation in 2005.

Eric Claus, A&P president and ceo, said the sale proved necessary even though, “efforts to revitalize our Midwest operations have been supported wholeheartedly by our management and store associates and by our local labor unions.”

In a January conference call, A&P spoke of finding a strategic solution to the problem of the lagging Midwest division, and then, Claus said, “I would say for sure the Midwest is tougher than what I bargained for.” Still, by focusing on its remaining stores in the Northeast, A&P can concentrate on facing increasing competition from all three major warehouse clubs, Wal-Mart, Ahold, Safeway, Delhaize, Wegmans, Wakefern and FreshDirect, among a host of others.

A&P also has announced its financial results for the past fiscal year.

U.S. sales for the full year were $6.9 billion compared with $7 billion for fiscal 2005. Total sales of $8.7 billion last year included sales of $1.7 billion related to Canadian operations, which A&P sold in August 2005. U.S. comparable-store sales decreased 0.5% for the year, but comps for the company’s core Northeast market gained 0.6%. Net income for fiscal 2006 was $27 million, or 64 cents per diluted share, versus $393 million, or $9.64 per diluted share, the previous annum, which included gains on the A&P Canada sale.

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