MONTVALE, N.J. — The future of A&P will be tethered to a figure from its past.
Ron Marshall, who formerly was Pathmark's chief financial officer and was the chief executive officer at Nash Finch Co., will take over as CEO of A&P effective Feb. 8, the company said last week. Marshall inherits a turnaround situation at A&P, which has endured increasing financial and operational difficulties ever since having acquired the Pathmark banner.
Marshall, who most recently was CEO of book and music retailer Borders Group, comes to A&P with a reputation as a “no-nonsense” leader with a strong financial background and the disposition to win the confidence of stakeholders, led by the powerful retailing investors Tengelmann Group and Yucaipa Cos. His track record includes a successful effort in reversing fortunes and the stock performance at distributor Nash Finch and the beginnings of a turnaround at struggling Borders Group, where he served for just over a year before resigning last week.
Analysts predicted Marshall would rein in capital budgets; work to find solutions to the dark real estate obligations that have plagued A&P for years; and would not hesitate to make strategic decisions including disposing of unproductive stores and geographies.
His style would present a marked change from Eric Claus, who since 2005 ran the company with a flair for merchandising and ground-breaking store formats. Claus left the company in October when the sour economy blunted much of the momentum he'd made behind the fresh formats at A&P and exacerbated ongoing struggles at Pathmark.
“Ron's got an eclectic range of experience that looks like it's going to be the right prescription to help A&P on the top line and the bottom line, with everything from transportation to competitive retailing,” Burt P. Flickinger III, managing director of Strategic Resource Group, New York, told SN.
“Marshall is a natural candidate for the position,” added another source, who asked not to be identified. “He has good knowledge of the industry, the geography and of A&P's history. He's a hard-nosed leader who will have no sacred cows. I expect to see some important strategic decisions from A&P in the future.”
Specifically, the source expected A&P under Marshall to be quick to exit unprofitable geographies to focus on its core locations in the New York and Philadelphia areas. This, the source speculated, could put stores up for sale in outlying areas like New York's northern suburbs, Connecticut and Maryland.
Marshall initially joined Pathmark in 1994 after serving as chief financial officer with the Dart Group, and president of Dart's Crown Books division. He was named CEO of Nash Finch in 1998. Although Marshall failed to grow Nash's retail presence by as much as he once hoped, the distributor rebounded from desperate times financially and was a strong stock performer over the course of his tenure. He resigned in 2006 amid a probe from the Securities and Exchange Commission over some of Marshall's stock trades. An SEC spokesman last week confirmed that no charges were ever filed against Marshall or the company.
“Ron did a heroic job saving Nash Finch financially after Nash Finch was on its knees financially,” Flickinger contended. “He was highly successful in terms of expanding wholesale through acquisitions, and his wholesaling background makes phenomenal sense for A&P considering that A&P has been in talks with [its supplier, C&S Wholesale Grocers]. Ron also knows price-impact store formats well and could build Food Basics into more of a powerhouse in the U.S.”
Karen Short, an analyst at BMO Capital Markets, New York, said she felt Marshall would be most effective at reining in spending. Christian Haub, A&P's executive chairman and interim CEO, recently remarked that a company of its size should be able to make $150 million in expense cuts annually.
“If that is in fact the possibility, maybe Ron is the right person for the job,” Short said. “There hasn't always been a fabulous discipline with regard to costs at A&P. There hasn't been anyone there to put their foot down since [former Chief Financial Officer] Mitch Goldstein.” Goldstein left A&P in 2005.
Short added, however, that she is not confident that between union labor, a supply contract with C&S and overhead, whether room exists to make such cuts. She said she was also skeptical that A&P would find willing buyers for its less desirable properties, should it choose to sell them. She was also uncertain as to how Marshall would operate A&P's complex multi-format strategy.
“Ron is definitely more of a financial leader than Eric Claus, who was definitely a merchant,” she said. “But that's not to say A&P doesn't need strong merchandising talent too.”
