Fleming's Kmart deal will mean jobs here

0 Comments | La Crosse Tribune, Feb 08, 2001 | by Cahalan, Steve

Fleming Cos. expects to add employees at its La Crosse distribution facilities because of a deal announced Wednesday by which Fleming will become Kmart Corp.'s only grocery supplier.

"We expect to begin supplying some (Kmart) stores out of La Crosse," Fleming spokesman Shane Boyd said from Fleming headquarters in Dallas, Texas. "It will be significant additional volume, and we will staff it to handle that volume" with additional employees.

Boyd said it is too early to know how many Kmart stores will receive their groceries from Fleming's La Crosse facilities and how many new jobs will result. Fleming has about 950 employees in La Crosse.

Fleming has 22 food distribution facilities around the nation and said Wednesday it will open three more because of the deal to supply all of Kmart's more than 2,100 stores. Boyd said the three new distribution facilities probably will open in existing buildings in New England, the Ohio River Valley and the Pacific Northwest.

"We'll be supplying all the Kmart stores," Boyd said. "The transition will be completed in July."

On Jan. 16, Kmart said it will terminate its grocery supply contracts with Fleming and with Supervalu Inc. of Eden Prairie, Minn., on June 30 and consolidate to a single supplier. On Jan. 19, Supervalu announced it had taken itself out of the running to be Kmart's sole supplier. Supervalu said what Kmart wanted would not result in an agreement that would be fair or make economic sense to Supervalu.

Fleming said sales attributable to its Kmart contract totaled about $1.3 billion in 2000, while Supervalu said its Kmart contract has been worth about $2.3 billion in annual sales.

Kmart and Fleming said Wednesday that Weir new deal will be worth $4.5 billion per year. The agreement includes grocery, meat, produce, frozen foods, dairy and other grocery items. As part of the agreement, Kmart will replace its American Fare brand of groceries with Fleming's Best Yet private-label products.

With the Kmart deal, Fleming will become the nation's largest wholesale food distributor, a title now held by Supervalu. Fleming has been the second-largest distributor.

"Fleming is reaping the benefits of the strategic initiatives undertaken during the last two years," said Mark Hansen, chairman of the board and chief executive officer of Fleming. "The changes we made to lower costs and improve our logistics infrastructure, including moves to central procurement and efficient consolidation of assets, have put us in a position to profitably take on business that others may find uneconomic."