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Tops Markets after bankruptcy: 'We're getting back up on our feet'

Tops Markets CEO Frank Curci is upbeat about the supermarket chain's future, despite the challenges that remain after the company emerged from bankruptcy last November.

"We're getting back up on our feet," Curci said. "Business is going good, the company's doing well. And we're back doing all the things that we should be doing."

Though Tops' bankruptcy reorganization allowed it to greatly reduce its debt load, it still faces $55 million in annual interest payments, according to Bankruptcy Court papers. If interest rates rise, those interest payments will increase. With grocery margins sliding and competition increasing, it doesn't give the company much wiggle room to wait out storms.

But Curci said the company is comfortable with its refinanced debt.

"It's totally manageable. We're in great shape," he said. "We're really happy not only at our debt level but with our new owners."

There hasn't been much fallout with customers since the bankruptcy, Curci said. Sales have been "fairly steady" since the company reorganized, and they're "growing slightly," although Tops does not have to disclose its financial data since it is a privately owned business.

"We went to great lengths to make sure that we kept doing what we were doing as much as we could," he said. "We did everything in the store like we normally do and, quite frankly, I am really happy with the way we got through the last year."

Tops has started reinvesting in its stores now that it has the cash to do so. The company just revamped its Elmira store and will finish its Thruway Plaza store on Walden Avenue next as part of a $40 million upgrade plan.

Tops in Lewiston. (Sharon Cantillon/News file photo)

Though the debt-strapped company had to put remodeling on hold in 2017, it had been completing them at a steady clip until then. It spent nothing on capital improvements in 2018. Struggling to manage its suffocating debt load, it virtually ran out of cash just before its bankruptcy filing.

Now, Tops is trying to catch up. The company ideally likes to remodel its stores every seven years, and they're averaging about 8 years at the moment, he said. The company plans to remodel 10 to 15 stores a year to get those numbers back in line.

"We're a little bit behind but it's not a big catch up," Curci said. "We really didn't stray all that far."

After closing 10 stores during the bankruptcy and announcing plans to close its store near the Broadway Market in August, Curci said there are no plans to close additional stores.

In fact, Curci would like to acquire other stores now that the company has more capital. Tops is looking around with hopes to expand its footprint, but it doesn't have any deals in place, Curci said.

It's following the same strategy it had before the bankruptcy – adding fuel stations and opening stores that fit into their current footprint. For the most part, that will mean smaller stores than the bulk of its portfolio, especially in Central New York and the Hudson Valley.

"There's a lot of square footage on the market now. It's a very competitive business, so there's stores all over the place," he said. "We think we can expand into niche areas."

Curci noted just how competitive business has gotten in a panel discussion for Niagara University's Food Marketing Center of Excellence earlier this month.

Grocery chains try to lure customers into their stores with bargain-basement prices on the most popular items, like milk and bread, often selling them below cost. So to be profitable, supermarkets need to make more money outside of those loss-leaders.

"The model is a little broken. You have every outlet in the country trying to sell the top 50 items, and they can do it without profit. Then we're trying to sell the whole rest of the store. It’s a challenge," he said.

Going forward, Curci sees growth opportunity in its private label products – an increasingly profitable category for grocers, and one Tops has spent the past few years revamping. The store now offers a premium store brand, a value brand and most items have a private label option that is equivalent to a national brand. Retaining those national and local brands, however, is a big part of Tops' strategy, especially as Wegmans emphasizes its own store brands over name-brand items.

"We design promotions around national brand products. It's about giving customers a choice," he said.

Another bright spot is meal solutions: items like meal kits, prepared foods, grab-and-go and ready-to-eat foods. The store also added "fruit butchers" in its East Aurora and Orchard Park stores, a popular new trend that has people cutting food on the sales floor.

"You've gotta give people a reason to come into stores," Curci said. "They can buy laundry detergent anyplace. We're looking at how we can make a customer's life simpler."

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