The Great Atlantic & Pacific Tea Company, Inc. Announces Results for First Quarter 2005; Company Reports EBITDA, Adjusted for Non-Operating Items, of $101 Million, up from $81 Million in Prior Year

Business Wire, July 22, 2005

MONTVALE, N.J. -- The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol: GAP) announced unaudited fiscal 2005 first quarter results for the 16 weeks ended June 18, 2005.

Sales for the first quarter were $3.4 billion, compared with $3.3 billion in the first quarter of fiscal 2004. Comparable store sales decreased 0.3% vs. year-ago. The loss for the quarter was $2.28 per share this year versus a loss of $1.11 per share last year.

Results from continuing operations, as shown on Schedule 1, were a loss of $89 million or $2.27 per share this quarter versus a loss of $41 million or $1.08 per share in last year's first quarter. The current year's results include charges totaling $68 million related to certain items that the Company believes are of a non-operating nature. These items include $50 million in restructuring costs, primarily related to the sale of the U.S. distribution operations to C&S, $15 million related to Midwest exit costs, and $3 million related to a Canadian dollar hedge. Last year's results included a $1 million restructuring charge. Excluding these items, EBITDA was $101 million for first quarter of fiscal 2005 versus $81 million for the same period of fiscal 2004.

Christian Haub, Chairman of the Board and Chief Executive Officer, said, "Our Company's improvement continued in the first quarter. A&P Canada's fresh marketing initiatives, improving discount Food Basics operation and cost controls contributed to excellent results in Ontario. In the U.S., our fresh store development continued to generate excellent customer response, while the Food Basics stores produced a good sales trend as our improvement of that format continued.

"We now look forward to the formation and development of The New A&P, as augmented by our major strategic accomplishments since the end of the quarter; namely the recently announced transfer of distribution operations, the pending sale of A&P Canada to METRO INC., and our executive leadership change going forward in the U.S.

"Our objectives for the second quarter and beyond are to:

--accelerate the improvement of our operating trends;

--close our Canadian transaction and realize the de-leveraging of our balance sheet;

--complete the remainder of our divestiture initiative;

--continue rolling out our U.S. fresh stores and improving our discount operations;

--and continue pursuing significant cost reduction opportunities, and shaping the organization of the New A&P."

Founded in 1859, A&P, one of the nation's first supermarket chains, is today among North America's largest. The Company operates 637 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 and other interested parties to listen to a live audio Webcast to be held at 11:00 AM Eastern Time today, at which members of the Company's senior management team will discuss the Company's first quarter financial results. The Webcast may be accessed through a link on the "Investors" page of the Company's Website, www.aptea.com. Listeners who cannot participate in the live broadcast will be able to hear a recorded replay of the broadcast beginning this afternoon and available until August 19, 2005.

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. EBITDA is defined as earnings before interest, taxes, depreciation, amortization, minority interest, discontinued operations and cumulative effect of change in accounting principle. 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.

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 and 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.