The Great Atlantic & Pacific Tea Co. Inc. (A&P) announced June 7 that it will enter into a new supply and logistics agreement with its principal wholesale supplier, C&S Wholesale Grocers Inc., pending approval of the U.S. Bankruptcy Court for the Southern District of New York.
The company estimates the revised contract will generate a run-rate of more than $50 million in annual savings, which will be realized in cash beginning upon the company’s emergence from Chapter 11 pursuant to a plan of reorganization. The new agreement will also help the company generate cash savings in the near-term by significantly and immediately improving supply chain and operational efficiency, as well as provide the company with key service enhancements.
“The approval of this new supply and logistics contract with C&S will mark a key milestone for A&P as we move forward with our restructuring,” said A&P President and CEO Sam Martin. “The agreement will strengthen our existing relationship with C&S, as we work together to drive service delivery and reliability enhancements and substantial efficiencies across our operations. The anticipated annual savings will significantly reduce A&P’s cost structure upon emergence from Chapter 11, while ensuring consistent product availability in our stores and greater diversity of products for our customers.”
As part of the agreement, A&P will partner more closely with C&S to take advantage of its access to competitive rates from key manufacturers and producers, creating greater economies of scale and enhanced supplier relationships that position the company to further distinguish its product offerings in key categories.