The Great Atlantic & Pacific Tea Company, inc. Announces Results for First Quarter 2004

MONTVALE, NJ – July 23, 2004 – The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol: GAP) announced unaudited fiscal 2004 first quarter results for the 16 weeks ended June 19, 2004.

Sales for the first quarter were $3.29 billion, compared with $3.23 billion in the first quarter of fiscal 2003. Comparable store sales increased 1.0% vs. year-ago for company-operated stores, including 0.5% in the U.S. and 2.7% in Canada. The loss for the quarter was $1.11 per share this year versus earnings of $0.31 per share last year.

Results from continuing operations, as shown on Schedule 1, were a loss of $41.5 million or $1.08 per share this quarter versus a loss of $20.6 million or $0.53 per share in last year’s first quarter. The prior year’s results include a tax benefit of $23 million, or $0.59 per share. Excluding this tax benefit, the loss from continuing operations would have been $1.12 per share last year, which we believe is more comparable to this year’s loss of $1.08 per share. EBITDA was $73 million for first quarter of fiscal 2004 versus $75 million for the same period of fiscal 2003.

During the quarter, the Company made three accounting changes, including adoption of two recent accounting pronouncements, FIN 46-R and EITF 03-10, and changing its method of accounting for certain inventories from LIFO to FIFO. FIN 46-R relates to Variable Interest Entities and, as a result of the adoption of this standard, the Company has now consolidated the financial results of its franchisees in Canada. EITF 03-10 relates to the accounting for certain vendor-supported promotions that requires a reclassification between sales and cost of goods sold, but has no impact on income. The change from LIFO to FIFO accounting for certain inventories was made so that all inventory accounting in the Company is on a FIFO basis. Previously, two divisions acquired over a decade ago had inventories valued on a LIFO basis. The Company has restated its 2003 results for the effects of these changes, which are shown on Schedule 3 of this press release.

Christian Haub, Chairman of the Board, President and Chief Executive Officer, said, “Our first quarter results were consistent with our recent trend, with positive comparable store sales and a third consecutive quarter of improved sequential operating earnings. I am encouraged by the improved operating and merchandising execution in all of our U.S. banners, and by A&P Canada’s strong sales and continued, solid profitability during the quarter.

“From the strategic platform established last year, we moved forward with significant growth initiatives in the first quarter. We expanded our discount Food Basics operations to our Midwest markets, opening 13 stores in Detroit and Toledo, Ohio. In addition, we acquired four stores in New Orleans, enhancing our Sav-A-Center operation in that market. We’re pleased that our improved liquidity and operating results have enabled us to begin growing our business once again.

“Our results show that the turnaround of A&P is underway, thanks to the combined efforts of our Corporate, U.S. and Canadian management and associates. Despite the challenges ahead, I am encouraged that the elements are in place for recovery and profitable growth in the future,” Mr. Haub said.

The Company also announced that, on July 9, the U.S. Court of Appeals for the Third Circuit unanimously upheld a district court decision to dismiss the shareholder class action lawsuit filed against the Company in June 2002.

Founded in 1859, A&P, one of the nation’s first supermarket chains, is today among North America’s largest. The Company operates 628 stores in 10 states, the District of Columbia and Ontario, Canada under the following trade names: A&P, Waldbaum’s, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug. The Company invites investors to listen to an audio Webcast of its quarterly discussion of earnings by accessing a link on the “Investor Relations” page of its Website, www.aptea.com. The live broadcast is on Friday, July 23, 2004 at 11:00 AM Eastern Time, with replays available from the afternoon of July 23 through August 20.

Effective March 28, 2003, the Securities and Exchange Commission (“SEC”) adopted new rules related to disclosure of certain financial measures not calculated in accordance with Generally Accepted Accounting Principles (“GAAP”). Such new rules require all public companies to provide certain disclosures in press release and SEC filings related to non-GAAP financial measures. We use the non-GAAP measure “EBITDA” to reflect a measure that we believe is of interest to investors. EBITDA is reconciled to Net Cash provided by Operating Activities on Schedule 1 of this release. We have also adjusted earnings per share for the one time tax benefit reported last year, which is reconciled in the narrative within the body of this press release.

This release contains forward-looking statements about the future performance of the Company, which are based on Management’s assumptions and beliefs in light of the information currently available to it. The Company assumes no obligation to update the information contained herein. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements including, but not limited to: competitive practices and pricing in the food industry generally and particularly in the Company’s principal markets; the Company’s relationships with its employees and the terms of future collective bargaining agreements; the costs and other effects of legal and administrative cases and proceedings; the nature and extent of continued consolidation in the food industry; changes in the financial markets which may affect the Company’s cost of capital and the ability of the Company to access capital; supply or quality control problems with the Company’s vendors; and changes in economic conditions which affect the buying patterns of the Company’s customers.

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Investor Contact:
William J. Moss
Vice President, Treasurer
(201) 571-4019

Press Contact:
Richard P. De Santa
Vice President, Corporate Affairs
(201) 571-4495