In a move that could signal the end of the Superfresh grocery store franchise in Maryland, the chain's parent company, which operates more than two dozen stores in the state, said Wednesday it wants to sell most of its local outlets as part of a plan to emerge from bankruptcy protection.
The Great Atlantic & Pacific Tea Co. of Montvale, N.J., said it plans to seek bankruptcy court approval to sell 22 stores in Maryland, two stores in Delaware and one in Washington.The sales, if approved by the U.S. Bankruptcy Court in New York, are expected to be completed by mid-June, the company said.
Whether any unsold Superfresh stores in Maryland would close is unknown. The company declined to speculate on possible scenarios if not all the stores are sold.
It also declined to release an estimate of the number of employees who work in the Maryland Superfresh stores.
Selling and closing stores is part of the company's restructuring plan as it tries to work its way out of bankruptcy and $3.2 billion in liabilities.
In recent months, Great Atlantic & Pacific Tea has notified the bankruptcy court that it intends to sell or close dozens of stores in New York, New Jersey, Pennsylvania, Delaware and Maryland.
"As part of our ongoing review of our store footprint, we determined that these 25 Superfresh locations are outside of A&P's core market," Sam Martin, the company's president and chief executive officer, said in a statement.
The company said in a news release that two Superfresh stores in Ocean City were not up for sale. Superfresh has 24 stores in Maryland.
Analysts say that the financial condition of the grocery chain's parent took a turn for the worse when the economy slipped into recession. Great Atlantic & Pacific Tea's last big acquisition was Pathmark in 2007, for $1.4 billion. Analysts also said that Superfresh failed to sufficiently differentiate itself from its competitors in Maryland.
"They [Superfresh] really haven't stood for anything in this market for quite a while," said Jeff Metzger, publisher of Food World, a trade magazine that follows the supermarket industry. "They don't have a true point of differentiation, other than their locations. You've got to stand for something.
"It's very competitive in the market."
Metzger said that Superfresh did not invest enough in expanding and modernizing its Maryland stores. He also said he was aware of interest in the Maryland stores from up to six buyers, but he added that probably not all stores would be acquired and that some could close.
According to Food World, Superfresh trails bigger rivals in the Baltimore-Washington region, landing in 10th place last year - well behind top three rivals Giant, Safeway and Shoppers - in terms of revenue.
Superfresh had sales of $359 million while Giant had sales of $4.9 billion. Superfresh had just 2.4 percent of the Baltimore-Washington market last year, according to Food World.
In December, Superfresh's parent filed for Chapter 11 bankruptcy protection and obtained $800 million in debtor-in-possession financing to continue its operations.
In February, the parent company announced it would close 32 stores in six states as part of its bankruptcy reorganization.
Great Atlantic & Pacific Tea currently operates 395 stores and employs more than 40,000 people in eight states.
The company traces its roots to 1859, when it was founded by two businessmen in New York.
It operates stores under the trade names A&P, Waldbaum's, The Food Emporium, Superfresh, Pathmark, Best Cellars and Food Basics. Superfresh is the only chain that Great Atlantic & Pacific Tea operates in Maryland.
Last year, Superfresh's corporate parent reported revenues of $8.8 billion and a net loss of $780 million.
Nationwide, Great Atlantic & Pacific Tea's retail stores are dwarfed in terms of revenue by larger rivals such as Safeway Inc. and Supervalu Inc. - each of whichhad more than $40 billion in revenue last year - and Kroger Inc., which had $82 billion.
Many of Superfresh's workers in Maryland are represented by the United Food and Commercial International Workers union. The union did not return a call seeking comment Wednesday.
Jeremy Diamond, a consultant and developer with the Diamond Group in Baltimore who follows the supermarket industry, said Superfresh faces tremendous competition from rivals such as Giant, Safeway, Mars and Shopper's Warehouse.
But Diamond also said that Superfresh had not done a good job of differentiating itself from competitors. Its prices are higher than others', and it is facing competition from Target and Walmart, which are increasingly adding grocery items to their stores, he added.
"Superfresh doesn't have anything that stands out from the rest," Diamond said. "For them to pull out of Maryland, it's not such a big loss because they haven't kept up competitively."
In the Baltimore area, competitors are already moving into previously shuttered Superfresh stores. The Fresh Market and Mars are planning to take over two locations this year.
The Fresh Market plans to move into a store on Dulaney Valley Road, across from Towson Town Center. Mars plans to take a spot in Bel Air at the corner of Business U.S. 1 and Route 24.