DALLAS -- Fleming here said its focus on distribution, price-impact retail stores and other initiatives helped provide earnings momentum for the year and fourth quarter ended Dec. 30.
Although the company reported a net loss for both periods, Fleming said earnings excluding adjustments for strategic-planning charges and one-time items were up 43.2% to $62.2 million for the year and 36.6% to $21.2 million for the 13-week quarter. Sales rose 1.2% to $14.4 billion for the year and 3.5% to $3.6 billion for the quarter.
On a segment basis, distribution sales increased 5.8% to $11.2 million for the year and 8.9% to $2.8 million for the quarter -- this despite the loss of business from United Supermarkets, Lubbock, Texas, which went to self-distribution, the company noted.
Fleming said it attributed the increase in distribution sales to an extra week in its 2000 fiscal year, as well as to an increase in sales to independent food retail customers and the addition of more than $1.2 billion in sales to new retail channel customers.
Sales in the retail segment fell 11.9% to $3.3 million for the year and declined 12.8% to $759.4 million for the quarter, with a 6.2% drop in same-store sales for the quarter.
Mark Hansen, chairman and chief executive officer, said Fleming was pleased with its fourth-quarter results "because they validate our strategic initiatives [that] focus on the distribution and price-impact retail business, paired with the benefits of our central procurement and low-cost pursuit initiatives, [which] are proving to be the key drivers of Fleming's earning momentum."
In a conference call with analysts, Hansen looked at those factors going forward and commented on the following topics:
Distribution. Hansen said Fleming will continue to look for ways to broaden its sales base by continuing to move into alternative retail channels -- as exemplified by its alliance with Kmart Corp., Troy, Mich. At the same time, Fleming will also attempt to increase volume from convenience stores, ethnic stores and supercenters "to make the supply chain more relevant to where consumers want to shop without making our company dependent on any one class of trade."
He said 60% of the dollar growth in Fleming's distribution segment came from new classes of trade, while 40% came from market-share gains made by existing customers.
Price-impact stores. Fleming plans to grow its Food 4 Less operation by 25 stores this year by expanding in existing markets, such as northern California and Arizona; by moving into new markets; and by converting some of its corporate Sentry Supermarkets in the Milwaukee area to the price-impact format, Hansen said.
The company also plans to add 20 to 25 Yes!Less limited-assortment stores this year and to develop a franchise model that "has some real downrange opportunities," Hansen said.
