What the CEOs Need to Hear

A&P
Supermarket analyst David Livingston, of DLJ Research, says A&P has long lacked financial discipline, something made clear by its overpriced purchase of longtime rival Pathmark.

"For reasons that I could only speculate, A&P overpaid for everything. Rent, transportation, goods and products sold in their stores, acquisitions of other stores and wages," he says.

Post-bankruptcy, the company -- once the dominant supermarket chain -- is in desperate need of a management overhaul. "Get out of the grocery business, because you are not very good at it," Livingston says to the top brass. "When I talk with other industry insiders they are just amazed at the total mismanagement of A&P. The punch line to all the industry jokes was 'Thank God for A&P,' meaning having them as an ineffectual competitor made life a lot easier."

Hundreds of stores should be closed or sold, and most likely will be, Livingston says.

"Most of the competitors completed their wish list a year ago of stores they would like to acquire," he says. "They couldn't reach a deal with A&P, but perhaps after bankruptcy, they can. Maybe the company can be more efficiently operated with [Executive Chairman Christian] Haub out of the way, renegotiated leases at market rates and supply agreements that are more fair."