Tops Markets has confirmed the story first reported by Bloomberg last week; the company will file for Chapter 11 bankruptcy protection.
The supermarket chain, based in Williamsville in the Buffalo area, says it is pursuing the restructuring in order to eliminate a substantial portion of debt and position the company for long term success.
Tops says that its stores across Upstate New York, Northern Pennsylvania and Vermont are continuing to serve customers with no impact on day to day operations.
“Tops has built strong market share and our stores continue to distinguish themselves by offering quality products at affordable prices with superior customer service,” said Frank Curci, Chief Executive Officer of Tops. “We believe the financing that we received from our noteholders is a vote of confidence in our business. Our operations are strong and we have an outstanding network of stores and a talented team to support them. We are now undertaking a financial restructuring, through which we expect to substantially reduce our debt and achieve long-term financial flexibility. This will enable us to invest further in our stores, create an even more exceptional shopping experience for our customers and compete more effectively in today’s highly competitive and evolving market.”
The recent Bloomberg story noted the tight margins in the supermarket world, a lot of competition, not just the big box chains, like Wal Mart, Costco, etc, but companies like Amazon, which recently purchased Whole Foods.
A Reuters report last month indicated that Tops is dealing with significant pension liabilities, stemming from an acquisition of a logistics company in 2013.
Burt Flickinger is president of Strategic Resources Group, a New York City based consumer research company. He says how the bankruptcy restructuring is handled may determine whether Tops can survive. He says if the restructuring does end up investing more money into the operation, that will help Tops thrive.
But Flickinger says Tops will also need to make some other strategic moves, including taking advantage of the many gas stations it operates.
“It has to capitalize on its advantage on gas, where tops has record-breaking profits, and they haven’t been adding new stores; and capitalize on the country stores and the Erie and Niagara County stores and also realize that they can’t compete against Wegmans in Rochester and Monroe County,” he told WXXI News.
David Livingston, a supermarket analyst with DJL Associates in Milwaukee, is not very optimistic that Tops will be able to stay in business, at least with the number of stores it has now.
“Obviously Tops had no chance when you’ve got Wegmans, and Walmart and Aldi up in those markets; and Costco, and many others. It was just a matter of time.” Livingston is predicting that eventually, quite a few of the Tops stores will be closed, while buyers are found for some of the other locations.
Tops has nearly 170 stores across the northeast and more than 14,000 workers.