PHASE II: Red Ink at the A&P

Although business executives generally have enthusiastically supported President Nixon's wage-price controls, they have always been aware that those controls might tip some none-too-profitable companies all the way into the red. Last week that theoretical possibility came true—and not for some small, struggling concern but for the nation's second largest retailer, A&P. For its third fiscal quarter, ended Nov. 27—a period that included nearly all of the wage-price freeze and two weeks of Phase II controls—A&P reported a loss of $1.1 million, v. a profit of $12.9 million in the like quarter a year earlier. The deficit was the first reported by the supermarket giant for any quarter since it went public 13 years ago. It occurred, said A&P officials, because the chain could not raise enough prices* to offset "sharp increases" in labor and other costs incurred before the freeze.

Price control, to be sure, is only one of A&P's problems; the chain, noted for its conservative management, had been suffering a decline in profits well before the freeze. Price Commission officials in Washington know of no other companies that claim to be losing money because of controls. Still, A&P's troubles are not altogether untypical; big supermarket chains generally reported flat or declining earnings for the third quarter, a fact that Wall Street analysts blame partly on the freeze.