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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
March 13, 2000
Date of Report (Date of earliest event reported)
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-4141 13-1890974
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
2 Paragon Drive, Montvale, New Jersey 07645
(Address of principal executive offices)
(201) 573-9700
(Registrant's telephone number, including area code)
None
(Former name or former address, if changed since last report)
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Item 5. Other events.
On March 13, 2000, The Great Atlantic & Pacific Tea Company, Inc. announced
a program to develop a state-of-the-art supply chain and business operations
technology system.
Copies of the press releases are attached hereto as Exhibit 99.
Item 7. Exhibits.
(c) Exhibits. The following exhibit is filed herewith:
Exhibit No. Description
(99) Press Releases dated March 13, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: March 24, 2000
THE GREAT ATLANTIC & PACIFIC TEA
COMPANY, INC.
By: /s/ Robert G. Ulrich
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Robert G. Ulrich
General Counsel and Secretary
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EXHIBIT INDEX
Exhibit No. Description
(99) Press Releases dated March 13, 2000
MONTVALE, N.J.-- (BUSINESS WIRE)-- March 13, 2000--
- - IBM selected as A&P's strategic partner
- - Retek and IBM sign deal to create new e-business solution for retailers,
A&P first to utilize new Retek/IBM offering
The Great Atlantic & Pacific Tea Company, Inc. (NYSE:GAP) today announced
Phase II of its ongoing Project Great Renewal - an after-tax investment of
approximately $250 million over four years to develop a state-of-the-art supply
chain and business operations technology system.
Christian Haub, President and Chief Executive Officer, said the initiative
will upgrade all processes and business systems related to the flow of
information and products between A&P-operated offices, distribution points and
stores, and between A&P and its suppliers.
A&P has selected IBM as its strategic partner for Project Great Renewal to
implement business process changes, a new application portfolio and a new
technical architecture, and assist in project and change management.
A&P expects to achieve cash benefits over the period in the range of $325
million net of tax, derived from improved margins, lower operating costs,
reduction of working capital and improved product availability. When this new
phase of Project Great Renewal has been fully implemented, the Company
anticipates improvement of ongoing annual pre-tax operating income of
approximately $100 million.
A&P said it expects these initiatives will enhance its ability to increase
sales by attracting more customers and increasing sales per transaction. However
the cash and ongoing profit benefits stated above do not include such impacts.
In support of Project Great Renewal, IBM and Retek, Inc. (Nasdaq:RETK) -- a
leading provider of business-to-business (B2B) solutions for the global retail
marketplace -- today announced they will work together to create a merchandising
solution to help food and drug retailers determine the right mix of products,
pricing and promotions across all sales channels including the store, phone,
Internet and catalog. A&P will be the first retailer to use this new
merchandising solution as part of its new business operations and technology
system.
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Initial work on Project Great Renewal will focus on re-engineering systems
supporting such functions as purchasing, inventory control, warehouse and
transportation management, category management, pricing, promotion analysis,
store space allocation, automatic replenishment, direct store delivery and store
operations.
According to Mr. Haub, the resulting new technology and communication
platform also will enable A&P to utilize Internet-based, business-to-business
(B2B) e-commerce with its suppliers, to improve supply chain efficiencies and
develop more customer focused and mutually profitable supplier relationships.
"This landmark investment in A&P's future follows the people and store
development improvements launched just over a year ago, and therefore represents
the third critical component of the Great Renewal strategy we charted in 1998,"
said Mr. Haub. "Combined, these initiatives will drive the top and bottom line
improvements we have already achieved to leadership levels, by maximizing the
impact and productivity of our market offering."
In October 1999, IBM retail industry consultants began working with A&P
senior management to build a comprehensive business case for the transformation
of A&P's supply chain and business operations systems, as the next phase of
A&P's Great Renewal program. IBM consultants worked with A&P to:
- - determine the company's business strategy and key opportunity areas; - define
the business functionality needed in A&P's technology systems; - evaluate and
select key software solutions; - analyze business processes; - define strategic
business initiatives; - and, develop an information technology strategy and plan
to support the strategic initiatives.
A key component of A&P's new technology platform will be the new
merchandising solution being created as a result of the new alliance between IBM
and Retek.
Merchandising solutions allow retailers to enhance customer service by
improving all aspects of the supply chain, including purchasing, replenishment,
space allocation, receiving, inventory management and price/promotion
management.
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The new offering will be developed using IBM's Application Framework for
e-business, a technology roadmap with IBM's leading software -- based on
industry standards -- that helps developers integrate Internet technologies with
traditional information technology. In addition, IBM will become the preferred
hardware, middleware, services and financing provider for Retek solutions and
create and staff a Retail Development Center in Minneapolis, MN, to provide
training, benchmaking and product demonstrations.
IBM and Retek estimate that the market opportunity for this type of
solutions exceeds $3.5 billion.
The Retek/IBM agreement is the latest in a growing number of alliances that
IBM is forming with leading independent software vendors (ISVs) based on a
developer alliance initiative announced in November 1999. Under the initiative,
Retek will gain access to new customers and revenue opportunities through IBM's
extensive marketing, sales, solutions and resources while positioning IBM as its
leading implementation and integration provider of middleware, server platforms
and services.
Under terms of the IBM/Retek alliance, the development environment for
Retek's B2B solutions also will be based on IBM's Framework for e-business, and
will include IBM middleware -- MQ Series and the Websphere family of products.
A&P said it is entering Project Great Renewal Phase Two from a foundation
of solid improvements generated by the campaign's initial phase launched in
December of 1998.
"At the outset, we said the most important measures of success moving
forward would be customer satisfaction and operating results. The structural
moves and total Company culture change set in motion 15 months ago have clearly
generated the improvements and forward momentum we believed they would. Now, our
goal for Great Renewal Phase Two is to develop this all-important systems and
process platform for our customer focused marketing proposition," Mr. Haub said.
He concluded, "We are proud to be the first major food and drug retailer to
partner with this alliance of IBM and Retek, leaders in the development of
retail process, system, information and e-business solutions. We are convinced
that this initiative, combined with our ongoing people and store development
efforts, will in due course elevate our performance
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and results to the leadership levels we are committed to achieve."
###
This release contains forward-looking statements about the future performance of
the Company which are based on Management's assumptions and beliefs in light of
the information currently available to it. The Company assumes no obligation to
update the information contained herein. These forward-looking statements are
subject to uncertainties and other factors that could cause actual results to
differ materially from such statements including, but not limited to:
competitive practices and pricing in the food industry generally and
particularly in the Company's principal markets; the Company's relationships
with its employees and the terms of future collective bargaining agreements; the
costs of other effects of legal and administrative cases and proceedings; the
nature and extent of continued consolidation in the food industry; changes in
the financial markets which may affect the Company's cost of capital and the
ability of the Company to access capital; supply or quality control problems
with the Company's vendors; and changes in economic conditions which affect the
buying patterns of the Company's customers.
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A&P Launches Second Phase of Project Great Renewal; Builds on
Successful Results Produced by Initial Phase
Company working with IBM, Retek on $250 million supply chain initiative.
System, process improvements expected to yield $325 million cash benefit over
four years, ongoing profit improvement.
Montvale, NJ - March 13, 2000 - The Great Atlantic & Pacific Tea Company,
Inc. (NYSE:GAP) today announced the second phase of A&P's Project Great Renewal,
authorizing an after-tax investment of approximately $250 million over four
years to develop a state of the art supply chain and business management
infrastructure.
The Company expects to achieve cash benefits over that period in the range
of $325 million net of tax, derived from improved margins, lower operating
costs, reduction of working capital and improved product availability. When this
new phase of Project Great Renewal has been fully implemented, the Company
anticipates improvement in ongoing annual pre-tax operating income of
approximately $100 million.
In addition, the Company expects that these initiatives will enhance its
ability to increase sales by attracting more customers and increasing sales per
transaction. However, the cash and ongoing operating profit benefits stated
above do not include such impacts.
The initiative will be implemented by a dedicated team of A&P executives
representing all key business functions, under the direction of Robert Panasuk,
formerly President of A&P's New England operations.
Reporting to President and CEO Christian Haub's eight-member Management
Executive Committee, Mr. Panasuk's team
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will work with an onsite team from a new strategic alliance concentrating on the
food and drug retailing industry formed by IBM (Somers, NY) and Retek
(Minneapolis, MN), announced today in a separate press advisory issued jointly
by the three companies. This combined team will upgrade all processes and
business systems related to the flow of information and products between
A&P-operated offices, distribution points and stores; and between the Company
and its suppliers.
Mr. Haub said, "We are proud to be the first major food and drug retailer
to partner with this alliance of the leaders in the development of retail
process, system and information solutions. Their combined expertise will help us
transform our core business processes, provide Internet-based e-business
capability, implement system solutions appropriate to our current and projected
needs, and elevate our ability to leverage and apply knowledge and information.
"This Landmark investment in A&P's future follows the people and store
development improvements begun just over a year ago, and therefore represents
the third critical component of the Great Renewal strategy we charted in 1998,"
said Mr. Haub. "Combined, these initiatives will drive the top and bottom line
improvements we have already achieved to leadership levels, by maximizing the
impact and productivity of our customer focused market offering."
The Company said the cost of implementing Great Renewal Phase II will
reduce net earnings for fiscal year 2000, ending February 24, 2001, by
approximately $1.50 per share. Benefits from improved systems and processes are
expected to start late in fiscal 2000, contributing approximately 5 to 10 cents
per share to this year's earnings. The Company expects benefits to accelerate in
the following years, substantially offsetting costs in fiscal 2001, and having a
significant, positive net impact on ongoing operating earnings beginning in
fiscal 2002.
The A&P/IBM/Retek Project Team will focus on business processes supporting
Store Operations, Marketing and Merchan-
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dising, Supply and Logistics, People Resources, Finance and the enabling
technologies. This Great Renewal Phase II initiative is a major driver of the
ongoing modernization of A&P's Information Systems framework, being directed by
Nicholas Ioli, Senior Vice President and Chief Information Officer, who joined
A&P's executive management team in 1999.
Mr. Haub said the customer impact of this initiative will be a shopping
experience that distinguishes A&P-operated stores from their competitors, by
virtue of superior product variety targeted to local preferences; more effective
promotional programs; improved in-stock levels and new item availability;
consistently excellent fresh food quality, and upgraded store operating
standards.
"Excellence in all of these areas is essential if we are to accomplish our
stated goal of becoming the Supermarket of Choice wherever we operate," said Mr.
Haub. "Accordingly, we rejected piecemeal system and process solutions to
shortcomings that hamper our progress today, choosing instead to address the
entire infrastructure, virtually reinventing the way we market our offering to
customers, and go to business with suppliers.
The Company said the work leading up to today's announcement was conducted
over the past five months by a cross-functional team led by Bill McEwan,
recently appointed President & CEO of the Company's new Atlantic Region. The A&P
team worked closely with IBM systems integration and change management experts,
resulting in the business plan approved today.
The approval follows the Company's February 7 announcement of its new
Atlantic Region management organization. As stated at that time, the regional
organization was designed to focus operating management more closely on store
performance and customer service issues, while positioning merchandising and
marketing management to develop and implement more targeted, customer driven
marketing programs. Mr. Haud today added, "The concentration of functions in the
region greatly improves the ability of our management team to utilize the
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processes that will result from the Great Renewal Phase II initiative."
The Company said it is entering this second phase of Project Great Renewal
from a foundation of solid improvements achieved during the campaign's initial
phase, launched by Mr. Haub and his executive management team in December of
1998. They include:
o Positive comparable store sales of 4.0% for the fourth quarter of
fiscal 1999 and 4.4% for the full year ended February 26, 2000, well
above the industry average for the same period;
o Number one market shares in Metro New York and Detroit, and number two
shares in Ontario, Canada and New Orleans; the Company's core
marketing areas accounting for 80% of total sales, in which A&P has
increased its share over the last 12 months;
o Reduction of costs through the closure of unproductive stores,
consolidation of administrative facilities and improved expense
management, as well as improved productivity in distribution and
manufacturing. Those achievements, combined with strong sales trends,
drove ongoing operating profits upward by 50% in fiscal 1999, on track
with the Company's plan;
o Achievement of management's commitment to add 55 new stores in fiscal
1999. In addition, the pipeline of new store projects has expanded, to
support aggressive development targets for 60 new stores in fiscal
2000 and 75 the year after.
o The strengthening of management and store associate teams through
comprehensive People Resources initiatives, includ-
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ing new performance measurement and compensation programs; leadership
and skills training at all levels; and the focus on shopper
satisfaction being driven outward to the point of customer contact.
Mr. Haub said, "At the outset of Project Great Renewal, we said the most
important measures of success moving forward would be customer satisfaction and
operating results. The structural moves and total Company culture change set in
motion 15 months ago have clearly generated the initial improvements and forward
momentum we believed they would. This is evidenced by the fact that we expect to
report fiscal 1999 fourth quarter operating earnings on target with both our
expectations, and the published First Call consensus.
He concluded, "Our goal for Great Renewal Phase II is to develop this
important systems and process platform for our customer focused marketing
proposition. We are convinced that this initiative, combined with our ongoing
people and store development efforts, will in due course elevate our performance
and results to the leadership levels we are committed to achieve."
Founded in 1859, A&P was the nation's first supermarket chain. One of North
America's 10 largest supermarket companies, A&P operates in 16 states, the
District of Columbia and Ontario, Canada under the following trade names: A&P,
Waldbaum's, Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Kohl's,
Sav-A-Center, Dominion, The Barn and Food Basics.
###
This release contains forward-looking statements about the future
performance of the Company which are based on Management's assumptions and
beliefs in light of the information currently available to it. The Company
assumes no obligation to update the information contained herein. These
forward-looking statements are subject to uncertainties and other
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factors that could cause actual results to differ materially from such
statements including, but not limited to: competitive practices and pricing in
the food industry generally and particularly in the Company's principal market;
the Company's relationships with its employees and the terms of future
collective bargaining agreements; the costs of other effects of legal and
administrative cases and proceedings; the nature and extent of continued
consolidation in the food industry; changes in the financial markets which may
affect the Company's cost of capital and the ability of the Company to access
capital; supply or quality control problems with the Company's vendors; and
changes in economic conditions which affect the buying patterns of the Company's
customers.
