Earnings Preview: Great Atlantic & Pacific Tea Co (NYSE: GAP) Second Quarter 2010
Tuesday, October 05, 2010 3:21 PM

Great Atlantic & Pacific Tea Co (NYSE: GAP) is scheduled to release fiscal second-quarter earnings before the opening bell on Wednesday, October 20, 2010. Analysts, on average, expect the company to report a loss of $1.29 per share on revenue of $1.91 billion. In the year-ago quarter, the company reported a loss of 29 cents per share on revenue of $2.07 billion.

The Great Atlantic & Pacific Tea Company, Inc. operates conventional supermarkets, combination food and drug stores, and discount food stores. As of August 13, 2010, the company operated 429 retail stores in 8 states and the District of Columbia under the A&P, Waldbaum's, Pathmark, Pathmark Sav-a-Center, Best Cellars, The Food Emporium, Super Foodmart, Super Fresh, and Food Basics names.

In the preceding fiscal first-quarter, the Montvale, New Jersey-based company's net loss was $122.64 million, or $4.83 per share, compared to $65.16 million, or $3.64 per share, in the year-earlier quarter last year. Excluding special items, adjusted loss from operations was $51.33 million compared to a net income of $3.61 million last year. Revenue dropped to $2.56 billion from $2.79 billion in the same quarter last year. Comparable store sales decreased 7.2% from prior-year quarter. Analysts, on average, expected the company to report a loss of 70 cents per share on revenue of $2.60 billion. Gross margin for the quarter declined to 29.78% from 30.28% in the year-ago quarter.

The supermarket operator has continued to suffer from lower sales, weaker margins and pressure from its competitors. At its last earnings call in July, the company had announced a comprehensive operational and revenue-driven turnaround initiative to enhance the company's competitive position. The turnaround is designed to generate sustained profitability and cash flow, drive sales growth, restore competitive margins to the business and strengthen the foundation of the company for the long term. As part of its turnaround initiative, the company announced the closure of 25 stores in August. The closures would be completed in its third quarter that ends early December. Last month, signed an agreement with Big Y Foods Inc., to sell seven store locations in northern Connecticut. The sale of these stores is part of a comprehensive turnaround strategy initially announced by the company in late July. The stores are expected to close at the end of October.

In terms of stock performance, Great Atlantic & Pacific shares have lost more than 65% since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.


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