OKLAHOMA CITY -- Fleming Cos. here said last week it will close or sell all 21 units of Consumers Food & Drug, Springfield, Mo.
The announcement came on the heels of the release of Fleming's year-end financial results, which showed a loss and decreased sales for the year and fourth quarter ended Dec. 26.
(Fleming also said last week it is adding the business of Nashville, Tenn.-based chain H.G. Hill Stores and is facilitating the transfer of ownership of the company's units to other independents. See story, Page 4.)
Consumers, which Fleming acquired in 1994, accounts for $145 million in wholesale volume, a spokesman for the distributor told SN. He said three stores have already been closed, with four more closings scheduled for March.
The spokesman also said Fleming hopes to find operators for the stores who will allow the distributor to continue to supply them.
Consumers is the second casualty among company-owned retail chains since December, when Fleming said it plans to sell 11 Hyde Park Markets, Fort Lauderdale, Fla., as part of a strategic overhaul. The spokesman said both Consumers and Hyde Park were not meeting Fleming's performance objectives.
Fleming also disclosed plans last week to close its produce buying office in Salinas, Calif., and to centralize all produce buying here "to better leverage our total size."
The loss for the year totaled $510.6 million and included a pretax charge of $668 million from previously disclosed impairment, restructuring and other onetime charges related to the company's strategic plan. Sales for the year fell 2% to $15.1 billion.
For the 12-week fourth quarter the loss was $537.2 million, including a pretax charge of $660.9 million. Sales for the quarter fell 1.7% to $3.56 billion. Besides the special charges, Fleming said, earnings were negatively affected by lower operating earnings in the retail-food and food-distribution segments; a settlement in a lawsuit with Furr's Supermarkets, Albuquerque, N.M. (involving payments of monthly fees while the retailer switched to self-distribution); and lower interest income -- all of which were partially offset by improved equity investment results, lower interest expense and lower incentive compensation.
Fleming said sales in the food-distribution segment fell 3.4% to $11.5 billion for the year and 3.6% to $2.7 billion for the quarter. Operating earnings in food distribution dropped 8.5% to $259 million for the year and 23.5% to $52 million for the quarter, due primarily to restructuring-related costs and lower sales, the company noted.
In Fleming's retail-food segment sales rose 2.9% to $3.6 billion for the year and 6.3% to $882 million for the quarter, while operating earnings dropped 22.5% to $62 million for the year and 23.5% to $52 million for the quarter. The company attributed the decline to higher labor costs and to a slip in same-store sales -- 3.6% for the year and 3.9% for the quarter.
Mark S. Hansen, chairman and chief executive officer, said Fleming's 1998 performance was "disappointing [and] underscores why we are taking decisive steps with our strategic plan to improve our performance.
