April 30, 2008
VIA EDGAR
Mr. H. Christopher Owings
Assistant Director
Mail Stop 3561
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-3561
Re: The Great Atlantic & Pacific Tea Company, Inc.
Preliminary Proxy Statement on Schedule 14A
Filed January 18, 2008
Form 10-Q for the Quarter Ended December 1, 2007 Filed January 7, 2008 Form 10-K
for Fiscal Year Ended February 24, 2007 Filed April 25, 2007 Definitive Proxy
Statement on Schedule 14A Filed May 25, 2007 File No. 1-4141
Dear Mr. Owings,
On behalf of The Great Atlantic & Pacific Tea Company, Inc. (the "Company" or
"A&P"), we hereby submit responses to the comments of the Staff regarding the
Company's preliminary proxy statement on Schedule 14A Amendment No. 2 filed with
the Commission April 18, 2008.
With regards to the staff's comments on Form 10-K for Fiscal Year Ended February
24, 2007, in comment 1, we respectfully request that we be permitted to address
the Staff's requests for expanded disclosure in future filings. Our responses to
the comment included herein indicates the revised or expanded disclosures we
would propose to include. Our Form 10-K for fiscal year ended February 23, 2007
is due no later than May 8, 2008 and we anticipate filing this report in a
timely manner. In addressing the Staff's comments, we note that the proposed
revisions enhance previous disclosures and do not believe that these changes
warrant revisions to previously filed documents when considering the impending
fiscal 2007 Form 10-K filing.
Set forth below are the Staff's comments contained in your letter and
immediately following each comment is the Company's response:
Inventories, page 45
1. We note your response to comment 6 of our letter dated April 3,
2008 that you will revise your description of your method of
costing perishables and pharmacy inventory in Note 1 to state
"Perishables and pharmacy inventories are stated at cost." Please
tell us and expand your disclosure to describe the method by which
amounts are removed from inventory and the method of cost
determination as required by Rule 5-02.6 of Regulation S-X.
Response:
We will expand our disclosure in future filings as follows:
Inventories
Store inventories are stated principally at the lower of cost or
market with cost determined under the retail method. Under the retail method,
the valuation of inventories at cost and resulting gross margins are determined
by applying a cost-to-retail ratio for various groupings of similar items to the
retail value of inventories. Inherent in the retail inventory method
calculations are certain management judgments and estimates, including
shrinkage, which could impact the ending inventory valuation at cost as well as
the resulting gross margins. Perishables and pharmacy inventories are stated at
cost. Distribution center and other inventories are stated primarily at the
lower of cost or market. As of February 23, 2008, the cost for 61.5% of
inventories was determined using the first-in, first out ("FIFO") method and
38.5% determined using the last-in, first-out ("LIFO") method. In fiscal 2006,
the cost for 100% of inventories was determined using the FIFO method. At
February 23, 2008, the excess of estimated current costs over LIFO carrying
value, or LIFO reserve, was approximately $2.3 million.
We estimate inventory shrinkage throughout the year based on the
results of our periodic physical counts in our stores and distribution centers
and record reserves based on the results of these counts to provide for
estimated shrinkage as of the balance sheet date.
Note 15 - Operating Segments, page 97
2. We have reviewed your responses to comments 7 through 11 of our letter
dated April 3, 2008. We note you have determined you have six operating
segments that you have aggregated under the criteria of SFAS 131, paragraph
17. It is not evident how you were able to conclude that you met all of the
aggregation criteria of paragraph 17 especially with respect to the nature
of products and services and similar economic characteristics based on the
information you have provided. It appears that there are enough operational
differences in your operating segments to render disaggregated information
helpful in assessing your performance and the direction of strategic
initiatives. Please provide us the following information with respect to
how you met the aggregation criteria.
o We note your previous response dated March 13, 2008 that the
stores all sell various combinations of food and beverage,
however, in your most recent response you state that
approximately 30% of the product sold is different between
stores. Further, tell us the percentage of products that are
similar between your Liquor segment and each of your other
segments. Also, tell us the percentage of products that are
similar between your Food Emporium segment and each of your
other segments.
o You state the disparities between the operating segment store
contribution percentages are due to competitive pressures and
cost structures which will mitigate over time and that the
economic characteristics should be evaluated based on future
prospects. In this regard, please provide us with store
contributions for each operating segment for the past five
years and the next few years of estimated future financial
data as well as any other performance measures that are
regularly provided to the CODM.
Response:
We sent schedules with the information you requested, via EDGAR, as a separate
letter. We will discuss this information in a teleconference on May 1, 2008
before finalizing our written response. We respectfully request that the
information be held confidential.
3. Reference is made to comment 8 of our letter dated April 3, 2008.
Please confirm that you will disclose whether operating segments
have been aggregated as required by paragraph 26 of SFAS 131 in
future filings.
We will include all required disclosure related to aggregating operating
segments in future filings.
................................................................................
Please feel free to call Melissa Sungela at (201) 571-4330 or myself at (201)
571-4363 with any further questions or comments.
Sincerely,
Brenda M. Galgano
Senior Vice President
Chief Financial Officer
cc: Melissa E. Sungela
Allan Richards
Chris McGarry