DALLAS, Jan. 16 /PRNewswire/ -- Fleming (NYSE: FLM) today announced that
it is in discussions to procure and distribute all grocery and consumable
products for Kmart Corporation's Big Kmart and Super Kmart stores. Presently,
Kmart sources its grocery and consumable products from several wholesalers, of
which Fleming is one. In preparation for its announcement of a single,
integrated supply chain partner, Kmart has sent termination notices to Fleming
and its other largest grocery and consumable wholesale provider. The notice
to Fleming provides that the current supply arrangement will terminate on
June 30, 2001. Sales attributable to the Kmart business totaled $1.3 billion
for Fleming in 2000.
"We have offered a number of compelling reasons why a Fleming supply and
logistics solution makes the most sense for Kmart," said Mark Hansen, chairman
and chief executive officer of Fleming. Among the factors put forth by
Fleming are its broad, national presence of existing distribution facilities;
its rationalized asset base, which has consolidated lower volume facilities
and concentrated on the most productive and efficient operations; its
strategic focus on centralized procurement and world-class logistic solutions;
its outstanding private label program; and, not to be overlooked, the
significant positive momentum Fleming currently enjoys in its operations,
finances, and culture.
"We truly believe that our supply chain is the optimal solution for
Kmart," noted Hansen. "In addition, our entire customer base will benefit
from the higher volumes and enhanced efficiency inherent in the potential new
business. However, with or without the Kmart business, we anticipate
continuing strength in our financial performance."
Hansen reaffirmed that the excellent sales and earnings momentum enjoyed
by Fleming in 2000 will continue into 2001. "Fleming's operations generated
gross new annualized sales of $3.2 billion over the last two years. We are
confident that our new business development efforts, spread between business
from independent retailers, convenience stores, and alternative retail
channels, will generate an additional $1 billion in new revenue in 2001."
Turning to earnings momentum, Hansen pointed to the many efforts that
helped propel Fleming's expected earnings higher by 40 percent in 2000. He
discussed the company's strategic efforts that have consolidated 12 of its
41 distribution centers and divested more than 90 underperforming or non-
strategic stores, and pointed to the Low Cost Pursuit program that reaped
significant cost savings in 2000. These efforts, combined with Fleming's
improvements in employee productivity and centralized purchasing, "give us
comfort that we can continue to generate strong earnings growth in 2001, while
continuing to pay down debt and bring our restructuring plan, and its special
charges, to an end," said Hansen.
Fleming is a $15 billion company and industry leader in procurement and
distribution. Fleming's primary business is buying and selling merchandise.
The company serves approximately 3,000 supermarkets, including more than
800 North American stores of global supermarketer IGA, 3,000 convenience
stores, and nearly 1,000 supercenters, discount, limited assortment, drug,
specialty, e-tailers, and other businesses across the country.
To learn more about Fleming, visit our website at http://www.fleming.com .
This release includes statements that:
(a) predict or forecast future events or results;
(b) depend on future events for their accuracy, or
(c) embody projections and assumptions that may prove to have been
inaccurate, including expectations for years 2000 and beyond.
These projections, forward-looking statements and the company's business
and prospects are subject to a number of factors that could cause actual
results to differ materially, including: the ability of the company to
successfully reach a procurement and distribution agreement with Kmart with
acceptable terms; the ability to successfully generate new business; adverse
effects of the changing industry environment and increased competition, sales
declines and loss of customers; exposure to litigation and other contingent
losses; failure to implement strategic initiatives according to plan or to
achieve the expected results of such plan; failure of the company to achieve
necessary cost savings; and negative effects of the company's substantial
indebtedness and the limitations imposed by restrictive covenants contained in
the company's debt instruments. These and other factors are described in the
company's periodic reports available from the Securities and Exchange
Commission.
CONTACTS:
(Media) Shane Boyd 972.906.8824
(Investors) Meredith Anderson 972.906.8592
SOURCE Fleming
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Related links:
http://www.fleming.com
CONTACT:
media, Shane Boyd, +1-972-906-8824, or
investors, Meredith Anderson, +1-972-906-8592, both of Fleming
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