TROY, Mich. -- Kmart Corp. here said last week its transition away from Fleming has gone "way better than expected."
Julian Day, chairman and chief executive officer, said Kmart is using "six major outside perishables wholesalers and a large number of smaller folk -- in the region of 100 to 120-plus" to supply products formerly supplied by Fleming.
"At this point we don't want to share who they are, though you can imagine who they would be," he added.
Surprisingly, one of them is Fleming, which is supplying slightly more than $200 million worth of products on an annualized basis to Kmart in the West -- including limited assortments of perishables, groceries and candy -- on a direct-store-delivery basis to a handful of Super Kmart stores in California and Arizona and some Big K's in Hawaii and Guam, a Fleming spokesman told SN.
Unified Western Grocers, Los Angeles, told SN it began supplying Super K's last week in Southern California; Phoenix and Tucson, Ariz., and Reno, Nev., with groceries, frozen foods, meat, delicatessen, service deli and service bakery items on a direct-store basis.
Several other wholesalers contacted by SN last week said they were not among the companies supplying Kmart, including Supervalu, Minneapolis; Roundy's, Pewaukee, Wis.; and Associated Wholesale Grocers, Kansas City, Kan. Spartan Stores, Grand Rapids, Mich., declined comment; executives at several other wholesalers could not be reached for comment last week, including C&S Wholesale Grocers, Brattleboro, Vt.; Nash Finch Co., Minneapolis; and Unified Western Grocers, Los Angeles.
Speaking with reporters during a conference call, Day said the shift of grocery merchandise away from Fleming to its new wholesale suppliers is complete, "and it's gone, and continues to go, extraordinarily well. As I've told the management team internally, it's an example of what this company can do when we bring great focus to a task."
The transition has not been problem-free, however, he said. "We've had some isolated out-of-stocks, including -- I'm ashamed to tell you -- a couple of Super Kmarts I was in that committed the cardinal sin of allowing themselves to be out of milk -- a problem that was immediately corrected.
"But our in-stock level today is at least as good as it was when Fleming provided us with these perishable goods," Day said.
According to Al Koch, Kmart's chief financial officer, "[The transition from Fleming] was a massive logistical undertaking, and we've had some occasional out-of-stocks. But we all feel the transition away from Fleming has gone way better than expected."
Kmart has been operating as a debtor-in-possession since filing for Chapter 11 bankruptcy protection in mid-January 2002. Day said the company expects to emerge from Chapter 11 on or about April 30 "if all goes as planned, though our reorganization efforts will continue beyond that date with four key objectives: to streamline our store portfolio, streamline our organization, cut costs and reduce debt significantly."
Day and Koch spoke with reporters during a conference call following the release of Kmart's financial results for the year and fourth quarter ended Jan. 29.
For the year, sales fell 14.9% to $30.8 billion after the shutdown of 283 underperforming Kmart stores, or 13% of its sales base, and same-store sales declined 10.1%. Kmart had a net loss of $3.2 billion for the year, compared with a net loss of $2.5 billion a year ago; excluding such non-comparable items as special charges, reorganization items and results from discontinued operations, the net loss was $846 million, compared with a net loss of $1.54 billion a year earlier, Day pointed out.
For the 13-week fourth quarter, sales fell 18.4% to $8.9 billion, same-store sales fell 9.8%, and the net loss was $1.1 billion, compared with a net loss of $1.7 billion a year ago.
