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Report: Tops Planning For Bankruptcy

Pictured is the Tops Market located in the Foote Avenue Plaza. P-J photo by Dennis Phillips

Tops Friendly Markets reportedly will be filing for bankruptcy next month.

Bloomberg, a software, data and media company, reported over the weekend that two U.S. Supermarket chains are preparing to file for bankruptcy according to people with knowledge of the matter. Along with Tops, Bi-Lo LLC, the controlling company of the Winn-Dixie chain, is also preparing for a bankruptcy filing next month. The report states that the owner of Tops Friendly Markets could potentially seek court protection from creditors, people familiar with the situation said.

Tops was founded by Italian immigrant Ferrante Castellani, who opened his first store in the 1920s in Niagara Falls. In 1962, the group opened its first true modern supermarket, a 25,000 square-foot store on Portage Road in Niagara Falls. The Williamsville-based chain runs 173 grocery stores with more than 14,000 employees in three states — New York, Pennsylvania and Vermont — according to regulatory filings last year.

In Jamestown, there is a Tops located at 2000 Washington St. and one inside the Foote Avenue Plaza. The Foote Avenue Plaza Tops opened in 2010 after the grocery store chain acquired The Penn Traffic Company, which used to operate a Quality Markets in the plaza.

When Tops purchased The Penn Traffic Company, they closed the Quality Markets that was located in the Lakewood Plaza. Today, a TJ Maxx and Michaels are the anchor stores for the Lakewood Plaza.

There are also locations in Falconer, Frewsburg, Westfield, Mayville, Dunkirk and Silver Creek, as well as in Warren, Pa., and Youngsville, Pa.

Bloomberg reported buyouts by Morgan Stanley — and later by the company’s own managers — left Tops straining to keep up with debt payments, and the industry’s intense competition made it hard to offset the burden by raising prices. Morgan Stanley Private Equity bought Tops from Dutch retailer Koninklijke Ahold NV in 2007 for $310 million.

Tops expanded quickly under its new owner, from 71 outlets in 2007 to more than 150 by 2013, and operating results initially improved. But same-store sales began to stall, and debt was used to help finance at least $375 million in dividends for its private-equity owners. Management bought out Morgan Stanley in 2013 through another leveraged transaction.

Tops’ stores include fresh and grocery departments, gas stations and pharmacies.

The Bloomberg report states that with low margins and ample competition, the grocery business has always been challenging, but now the industry is contending with a more aggressive push by big-box retailers and Amazon.com Inc., which acquired Whole Foods last year to give it a larger brick-and-mortar presence. The moves threaten to force older chains to either consolidate or revamp their operations.

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