retail news in context, analysis with attitude

The Great Atlantic & Pacific Tea Co. (A&P) yesterday said that Eric Claus, the company’s president/CEO, has resigned, as it announced financial results that included sales that were down for the second quarter to $2.1 billion from $2.2 billion during the same period a year ago, same-store sales that were down 3.8 percent, and a loss from continuing operations of $62.2 million (which it said included “a $50.0 million increase in non cash mark to market adjustments related to financial liabilities) compared to a loss of $4.3 million during the same period a year ago.

In his prepared statement, company executive chairman Christian Haub said, in part: "The current challenging economy continues to impact our business. The macro headwinds including rising unemployment, intensifying price competition and now also deflation are creating an even more difficult short-term economic environment. Nonetheless, we have made progress in several of our formats and many of our initiatives.

“Our legacy business which is mainly comprised of our Fresh, Discount and Gourmet stores experienced negative same stores sales in the quarter but through tight expense control and stronger margins produced positive year over year segment income. Our Price Impact or Pathmark business continues to struggle as we experienced negative same store sales and negative year over year segment income. We have been making the difficult choices for the short term, such as improving our retail pricing, and will continue to work on lowering our expenses, enhancing our customer service and improve our overall brand image of this key format ... We believe that once the economy improves these strategies will position us well to realize the tremendous strategic value of the company and to capitalize on our leadership position in the Northeast."

Haub, who reportedly will serve as interim CEO while a search is conducted for Claus's replacement, added: "I would like to thank Eric Claus for his contributions to our Company during his tenure at A&P and wish him well in his future endeavors."
KC's View:
To be honest, I was shocked by this news...and it takes a lot to shock me these days.

Granted, A&P was having a tough time as Eric Claus tried to reposition the company with a multi-format strategy during a recession that was wreaking havoc on many of the communities that the company serves in the northeastern US.

And Pathmark, to be sure, was like an anchor tied to the company’s balance sheet.

But I am surprised.

Now, to be honest, I have to say that I like Eric Claus a lot. He’s always been forthright with me, and strikes me as a stand-up guy with an enormous amount of passion for the business. So I cannot be entirely objective here.

That said, he also seemed to have generated a lot of goodwill within the company and, best I could tell, seemed on track with his goals if somewhat frustrated by the perfect storm of circumstances that made things a lot harder than he would have liked.

Let’s not forget that Eric Claus ran A&P’s successful and profitable Canadian operations before the company sold them off and brought him to the US in 2005 to take over a very troubled chain. It isn’t like he is less skilled and passionate now than he was then, and it isn’t like he’s been pursuing a strategy that was unknown to the board of directors.

It is hard to know what role Yucaipa, the private equity form that has been putting money into A&P might have played in this. That’s why this seems like it is about something else other than performance.

One other quick note. Is A&P maintaining that Eric Claus has somehow been outperformed by Christian Haub through all of A&P’s struggles? hard to imagine. Of course, Eric Claus isn;t a member of the family that owns the company that owns much of A&P...so he’s safe and apparently not accountable.

All of which simply suggests that life isn’t fair.

Though Eric Claus can come work for MorningNewsBeat anytime.