The Great Atlantic & Pacific Tea Company, Inc. Announces Results for Third Quarter Ended December 4, 2004

Business Wire, Jan 7, 2005

MONTVALE, N.J. -- The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol: GAP) announced unaudited fiscal 2004 third quarter and year to date results for the 12 and 40 weeks ended December 4, 2004.

Sales for the third quarter were $2.52 billion, compared with $2.48 billion in the third quarter of fiscal 2003. Comparable store sales for company-operated stores declined 1.0% vs. year-ago. The loss for the quarter was $1.96 per share this year versus a loss of $0.66 per share last year.

The current quarter's results from continuing operations, as shown on Schedule 1, were a loss of $73 million or $1.89 per share and were in line with last year's results of $73 million or $1.89 per share. The current year's results include charges totaling $37 million related to certain items that the Company believes are of a non-operating nature. These items include $35 million related to impairment charges on long-lived assets in its Midwest operations, $1 million for costs related to the previously announced Canadian Food Basics settlement, $4 million related to the reorganization announced on December 9, offset by a $3 million reversal of prior year restructuring charges. Last year's results include $60 million related to asset impairment charges on long-lived assets in its Midwest operations. Excluding these non-operating items, EBITDA for the quarter was $48 million as compared to $42 million for the same period last year.

Sales for the 40 weeks year to date were $8.29 billion versus $8.18 billion in fiscal year 2003. Comparable store sales for company-operated stores declined 0.1%. The net loss per share was $4.74 for 2004, compared with a loss of $2.51 for 2003, which included earnings of $1.60 per share from discontinued operations. Excluding all year to date non-operating items, EBITDA for the 40 weeks of fiscal years 2004 and 2003 was $164 million and $155 million, respectively.

Christian Haub, Chairman of the Board and Chief Executive Officer, said, "Although we remained unprofitable overall, we maintained market share in a difficult sales environment, while achieving our second consecutive year-over-year increase in operating results.

"Our Canadian operations produced another profitable performance with strong results from our fresh food marketing initiatives, and an improving trend in our Food Basics discount operations. We completed the acquisition of 24 previously franchised Canadian Food Basics stores, and look forward to further improving our discount business. Our U.S. operations continued to improve despite intense competition in all markets, as U.S. operating results again contributed to our EBITDA growth in the quarter.

"To accelerate our return to overall profitability, we have initiated significant organizational changes in the U.S., including the management consolidation announced on November 4, and the subsequent reorganization of U.S. administration, support services and operating staff announced on December 9. This will strengthen central management control, substantially reduce costs, and drive the implementation of our Fresh and Discount retail strategies.

"Our near-term outlook remains conservative as we expect no major upturn in consumer confidence and spending in the U.S., and therefore no easing of competitive pressures. We will continue to manage costs, investment and liquidity closely, maintain our successful growth course in Canada, and implement our U.S. retail strategies, as the benefits of our leaner organization and cost structure materialize," Mr. Haub said.

Founded in 1859, A&P, one of the nation's first supermarket chains, is today among North America's largest. The Company operates 650 stores in 10 states, the District of Columbia and Ontario, Canada under the following trade names: A&P, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug. The Company invites investors to listen to an audio Webcast of its quarterly discussion of earnings by accessing a link on the "Investor Relations" page of its Website, www.aptea.com. The live broadcast is on Friday, January 7 at 11:00 AM Eastern Time, with replays available from the afternoon of January 7 through February 4.

Effective March 28, 2003, the Securities and Exchange Commission ("SEC") adopted new rules related to disclosure of certain financial measures not calculated in accordance with Generally Accepted Accounting Principles ("GAAP"). Such new rules require all public companies to provide certain disclosures in press release and SEC filings related to non-GAAP financial measures. We use the non-GAAP measure "EBITDA" to evaluate the Company's liquidity and it is among the primary measures used by management for planning and forecasting of future periods. The Company believes the presentation of this measure is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by the Company's management and makes it easier to compare the Company's results with other companies that have different financing and capital structures or tax rates. In addition, this measure is also among the primary measures used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the results of the Company to other companies in its industry. EBITDA is reconciled to Net Cash provided by Operating Activities on Schedule 1 of this release.