July 23, 2015

Christian Haub on the demise of A&P

Christian W. E. Haub, Tengelmann partner
Christian Haub: "A&P helped us to really understand the US consumer market"
The sad fate of historic and now insolvent US supermarket retailer A&P will provide students at Harvard Business School with study material for generations to come. It is certainly remarkable how the Great Atlantic & Pacific Tea Co., a household name in America with more than 15,000 stores, eventually crumbled into a small regional multiple only to file for Chapter 11 again this year.

Although the Haub family exited A&P for good in 2012, their name had been inextricably linked with the company for over three decades. The owners of Germany's seventh-largest retailer Tengelmann Group have long gone on to pastures new and are currently reinventing themselves as an important investor in internet start-up companies.

So theoretically they could just wash their hands of A&P and refuse to comment. However, Lebensmittel Zeitung judged Tengelmann partner Christian W. E. Haub rightly in that he did have something to say about the fate of the proud company he once presided over.

The Montvale/New Jersey-based retailer, had been fighting for life after emerging from Chapter 11 bankruptcy and going private in 2012, but took a big blow when CEO Sam Martin threw in the towel last year.

Currently a number of larger rivals are in a feeding frenzy and are cherry-picking its 296 stores in six north-eastern US states. It will be interesting to see whether German discounter Lidl, who intends to enter the States by 2018 at the latest, will try to scoop some up. The rest will go to the dogs, and many of its 34,000 staff will soon be looking for a new job.

"It's all very sad"

   
Mr. Haub, why do you think the restructure of A&P in 2012 has ended in insolvency?

The new insolvency at A&P comes as no surprise for those who know the US trade. The reorganisation of the company in 2012 was only done half-heartedly. The new investors held on to too many loss-making outlets and kept all of the head office open. They also neglected to reduce cost structures, such as logistics and wages.

Pay structures had been negotiated with the unions so that wages would have reached their original level again in three years. For all these reasons, and also because price levels were too high in the stores, A&P wasn't able to withstand the competition. So, despite $500m in fresh investment capital, the company didn't have enough strength to rejuvenate itself. Last but not least, the change of CEO after only 18 months at the helm had a negative effect.

How do you see the future of A&P? 

Now all that remains is an orderly liquidation with the sale of the best outlets to Ahold, who will take 25 stores; Acme (a subsidiary of SuperValu), who will take around 80 outlets; and a further 20 stores to Key Food, a local chain based in the greater New York area. Many of the remaining 175-odd stores probably won't find a buyer, and 25 closures have already been announced.

I expect the whole company to exit the market by the end of the year. The final demise of one of America's most traditional food retailers is very sad and particularly for those who work there.

You criticise the mistakes of the current management, but didn't Tengelmann's long ownership of A&P also end in a double-digit million loss when you wrote the company off your books after the first insolvency in 2010?  

The facts are that Tengelmann was able to achieve a positive return on invested capital for the whole 30 years it owned the company. During this time we also came to really understand the American consumer market, which is proving very advantageous today for our new investments in young consumer goods companies.


Related article in German: By Mike Dawson in Lebensmittel Zeitung, no. 30, 24.07.2015


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Comments for this article are closed.

  1. Jimmy Pants
    Created 25 July, 2015 21:14 | Permanent link

    He Milked It Too

    He milked it for what it was worth too.

    Always the high-price leader on everything, and a main office where the left hand didn't know what the right was doing.

  2. Robin the Truth
    Created 29 July, 2015 13:55 | Permanent link

    Archaic Union Contracts

    Not sure what you mean by milking. The main reason for A&P's lack of competitiveness were and are archaic union contracts, e.g. having a guy working behind the deli counter not being allowed to cut cheese as he was under the meat cutters' contract.

    Union protection turf versus customer orientation, while at the same time competitors like WalMart and Whole Foods "enjoy" union free stores.

    Irrationalities don't start (and don't stop) always at the top, sometimes they start at the bottom.

  3. Gary Brucker
    Created 17 August, 2015 19:41 | Permanent link

    Our Customers Aren't Stupid

    I work at a Pathmark in a lower-income neighborhood, but our prices are higher than in any other market in any income neighborhood. Our customers are not stupid. Nothing to do with union contracts.

  4. Chris
    Created 17 August, 2015 20:30 | Permanent link

    Identical Contracts...Including Ahold

    None of what you're saying is accurate to the point of lies. If you actually formed opinions based on real facts, you would be aware every supermarket chain around has nearly identical contracts...including Ahold.

  5. Long Island Waldbaums Union Middle Class Worker
    Created 17 August, 2015 21:30 | Permanent link

    Did Nothing But Take

    Once again it's the fault of the unions. Once again the middle class bares the brunt of stupid greedy corporate ****** who did nothing but take from this company.

    And what about "Bright Farms", a company Mr. Haub owns? I work in produce, and every single delivery we get Bright Farms products. We don't order them, they just come in 5, 6, 7 boxes at a time. What about that???

    We are still to this day paying Mr. Haub. So, as sad as he says all this is...he is still making money out of A&P. ********************************************

  6. Timmy Kov
    Created 17 August, 2015 22:28 | Permanent link

    Somebody Was Looking to Sell Out

    I worked for this company for 34 years, and when the Haub family bought into A&P I felt very comfortable.

    As time went on the company made lots of money. Then, little by little, things changed: New CEOs were being hired and fired or resigned, along with super fresh stores closing by the cart full. It didn't take rocket science to figure out that somebody was looking to sell out, after milking this cash cow for what it was worth.

    So you all now know the rest of the story. I believe the Haub family planned this from day one. I loved working for The Great Atlantic and Pacific Tea Company. It will be sorely missed by many who worked and shopped there.

    Thank you A&P for 34 great and memorable years. Farewell...

  7. Tony
    Created 17 August, 2015 23:54 | Permanent link

    Others Employ the Same Union Workers

    These ***** want to keep blaming the union workers instead of accepting blame for their downfall. But here is a thought, you *******. All those other supermarket companies out there, who are successful and making a profit, employ the same union workers at the same rate of pay. WHY IS THAT?

  8. Marc
    Created 18 August, 2015 01:01 | Permanent link

    A Shame

    I used to love when he would pop into my store when visiting his kid at Princeton. My department was the first one he would see and he always had a kind word. I left in 2004 with no animosity toward him or the company. It's a shame to see what's become of it today. God bless everyone involved with what's going on right now.

  9. Mike Keba
    Created 18 August, 2015 03:10 | Permanent link

    The Pension Fund

    Can't forget how they raided the pension fund when they bought the company? Basically got it for a song .... Best of luck to all the associates who are left.

  10. Anonymous
    Created 18 August, 2015 05:23 | Permanent link

    A & P executives

    What is sad, Mr. Haub, is how the executives all mismanaged this company and its employees. Neither you nor any of the executives were ever or are concerned for us, the ones who open these stores everyday and listen to the complaints from patrons, who threaten to go to other stores where prices are better. I can't blame them.

    Personally, lately, I buy as little as possible there myself for the reason of the prices.

    LISTEN TO YOUR CUSTOMERS AND EMPLOYEES AND LEARN FROM IT. SELL FOR LESS AND MAKE MORE IN THE END AND KEEP YOUR CUSTOMERS COMING. This is not hard to figure out. How could all of you have been so stupid to not listen to us?

    Oh, wait, your pockets were all full, you got your raises and bonuses, took no cuts, and lost no vacations, but took away from us who kept things going. So who was stupid here? I guess we were for believing in all of you, the executives.

  11. LongGone
    Created 18 August, 2015 05:24 | Permanent link

    A Clear Pattern

    The Haubs are either in denial, or they think we're too stupid to see through them.

    If you look at how they managed the company, you see a clear pattern. They'd buy a successful regional grocery chain that was loved by its customers and promptly ran it into the ground. It was remarkable how consistent they were in destroying grocery chains: Waldbaum's, Food Emporium, Farmer Jack, Kohl's, the list goes on and on.

    I can't believe he actually thinks he did a good job. Not sure where these "positive returns" came from either, but then I do remember a few "restatements" of our financials when I was there.

  12. Pissed off
    Created 18 August, 2015 13:48 | Permanent link

    Unions Are Needed

    Unions are needed to protect workers from the greedy **** of corporate that takes advantage.

  13. Terri Lam
    Created 18 August, 2015 14:37 | Permanent link

    Understanding the US Consumer...Really?

    Christian Haub: "A&P helped us to really understand the US consumer market"
    Then why did you go bankrupt? TWICE

  14. Kkom
    Created 18 August, 2015 20:15 | Permanent link

    No Leadership Skills

    This ***** is the reason A&P is dead. No leadership skills, no ideas of his own. It was often said that when you talk to Christian you were talking to the last person he spoke to. Spent millions on garbage programs, brought in CEOs that had no business running a grocery chain. Sleep well, Christian. Blame the people you left behind to try and clean up your mess.

  15. Kkom
    Created 18 August, 2015 20:20 | Permanent link

    A Terrible Move

    Also forced the purchase of Pathmark on Eric Claus a terrible move obvious to all.

  16. Ken Gold
    Created 18 August, 2015 22:15 | Permanent link

    The 8 Dollar Dividend

    Everyone forgets the 8 dollar dividend that cost the company 300 million dollars. 150 million went to the Tenglemanns and the other 150 went to investors.

  17. mike
    Created 19 August, 2015 00:43 | Permanent link

    No Plan, No Future

    All supermarkets have unions. It's the revolving door of upper management that came in and milked the company and union concessions dry. With no plan there is no future.

  18. Tom Leon
    Created 19 August, 2015 00:47 | Permanent link

    Run into the Ground

    Christian Haub did nothing but help run them into the ground.

  19. mike
    Created 19 August, 2015 00:51 | Permanent link

    New York Supermarkets

    There are plenty of NY supermarkets with unions making money.

  20. mike
    Created 19 August, 2015 00:56 | Permanent link

    Like a Kid Buying a Toy

    Haub was clueless when they bought Pathmark, that ship was already sunk. No plan. It was like a kid buying a toy, playing with it for ten minutes and never looking at it again. Management was terrible: never forcing structure or strategy, just raising prices.

    We just watched the stores empty out and the investors steal what we earned for 30 plus years of employment.

  21. Robert Collins
    Created 21 August, 2015 20:13 | Permanent link

    You Need Look No Further

    The biggest mistake the Haub family made was giving A&P to Christian to play with. Jim Wood, the Chairman and CEO before Christian, had the company in the black with a $65.00 per share price and paying div. Christian came in with immaturity and useless programs such as Evergreen and spending good advertising dollars on tennis and other programs.

    You need look no further than Christiam Haub for the demise of A&P.

  22. Doris Hogate
    Created 26 August, 2015 19:38 | Permanent link

    Oktoberfest in West Philadelphia failure

    I worked for an A&P that was located in West Philadelphia before they closed all the Philadelphia stores in 1982.

    The people in Montvale thought it would be a good idea to celebrate Oktoberfest. A great time to celebrate, but not in West Philadelphia. All the product that was sent in over four pallets of product was eventually reduced and then donated to a nursing home. What a complete waste of time and money for our store.

    We know the American consumer, not with that program you didn't.

  23. John R. Fugazzie
    Created 12 October, 2015 03:25 | Permanent link

    The (no longer) Great Atlantic & Pacific Tea Co.

    The loss of A&P is sad for the American icon brand and all the people who work there, and it is the fault of all the people who led it over the last 30 years. They always benefited from having something to sell off to keep it going. I worked there for two tours of duty in 1987-1991 as Director of National Purchasing, we consolidated 10 buying offices into a central buying concept. And then back in 2011-2012 as Director of Dairy and Frozen under the Burkle era.

  24. Keith Olson
    Created 21 February, 2016 04:35 | Permanent link

    Former A&P/Kohls Manager

    Christian flew into Madison, Wisconsin, to visit my store for its grand opening on the company jet. From there he went to his ranch in Wyoming. Meanwhile, I couldn't staff my service departments with more than one associate at a time and they allowed the most incompetent management team to run the division.

    l'm sure that Tengelmann came out ahead on the whole A&P deal and screwed all of the hard-working loyal A&P employees. Best wishes in your future endeavors, Christian, hope you don't screw up more peoples lives.

  25. Keith Olson
    Created 21 May, 2016 07:55 | Permanent link

    Good-old boys

    Amazing how someone who ran a 156-year-old company into the ground is still asked to be on the board of directors of other companies. When will this ridiculous cycle of good-old boys be broken and someone held accountable?

  26. Vivian M. Gallo
    Created 17 April, 2018 19:47 | Permanent link

    Devastated

    I am devastated. I worked for A&P for many years.This company did make money! We truly had the consumers. We had hard-working employees in an honest environment.
    I do not know the greedy CEOs and other individuals who walked away with the monies they owed their vendors, employees, and staff pensions.
    I think to sacrifice proven values in the name of change isn't always a good path to follow, the founders had it correct. Sadly, old man Tengelmann gave his son too much credit. This was an American company and it died the day it was left to the Haubs.
    Chistian Haub enjoy the profits!

  27. Patricia Malin
    Created 26 June, 2018 21:22 | Permanent link

    Christian Haub and A&P

    What a great portrayal of the great A&P.

    I too spent 30 wonderful years in deli and bakery. My theory was, if you need two, order three, not 33 to pile high and watch them fly directly into the trash shoot.

    A more humble man would have done things more modestly.

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