MONTVALE, N.J. — Grocer A&P has entered into a new supply and logistics agreement with its principal wholesale supplier, C&S Wholesale Grocers, that is estimated to generate a run rate of more than $50 million in annual savings. The revised contract must be approved by the bankruptcy court.
Under the revised contract, if approved, the annual savings will be realized in cash beginning upon the company's emergence from Chapter 11 pursuant to a plan of reorganization. The new agreement also will help the retailer generate cash savings in the short-term by improving supply chain and operational efficiency, as well as providing 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," A&P president and CEO Sam Martin said. "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."
The company anticipates that the court will consider its motion on the new C&S contract at a hearing later this month.