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Pathmark Jumping on Fresh Foods Bandwagon

Posted on: Friday, 2 June 2006, 21:00 CDT

By Kevin G. Demarrais, The Record, Hackensack, N.J.

Jun. 2--Pathmark Stores Inc. announced Thursday that it is working on a new prototype for its supermarkets, even as it continues to lose money.

The Carteret-based chain, which lost $5.4 million in the first quarter ended April 29, said future stores will be built around a fresh foods concept.

That is the same strategy adopted by rival A&P, which has also struggled in recent years. A&P unveiled its prototype store in Midland Park in February, and the Montvale-based chain is incorporating that design and an emphasis on service departments and organic foods in renovations throughout the chain.

Pathmark's prototype should be ready in the next six months, and could be incorporated in some remodels planned in the fourth quarter, said John Standley, who took over as chief executive of the 141-store chain last August.

At the same time, the chain has redesigned its weekly sales circular, which it will unveil today. It features a large photo of ripe strawberries and the slogan, "all about fresh all summer long."

The goal is to "make sure consumers are thinking about Pathmark when they are buying fresh products," Standley said.

While it expresses optimism for the future, Pathmark's losses grew. Its $5.4 million loss, or 10 cents a share, is more than double the $2.1 million (7 cents a share) it lost in the comparable period last year.

In addition, overall sales edged down to $998.5 million from $1 billion in 2005 and sales at stores open at least a year -- a key measure of retail success -- fell 0.1 percent.

Still, the chain is making progress with its operating initiatives, said Standley, who was recruited from Rite-Aid Corp., where he had been chief financial officer. Earlier he was an executive with Ron Burkle's Yucaipa Cos., which purchased a 40 percent stake in Pathmark last June 9 for $150 million.

The non-food business has "recovered nicely," pharmacy sales are improved, and grocery and produce sales were good, he said. Store traffic is down slightly, but those customers are spending a bit more.

"I think our results are starting to show," Standley said. "We're very optimistic about the future prospects of Pathmark."

Investors responded to the upbeat appraisal Thursday by pushing Pathmark stock up 32 cents a share -- 3.4 percent -- to close at $9.67.

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PTMK,

Source: The Record - Hackensack, New Jersey

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