MINNEAPOLIS -- Supervalu here said last week the loss of $2.5 billion worth of business from Kmart Corp., Troy, Mich., is expected to reduce earnings by 18 to 22 cents per share for the year ending in February 2002.
ago it had ceased negotiations with Kmart for the total business, explaining the margin levels Kmart was seeking did not make economic sense for Supervalu.
Mike Wright, chairman and chief executive officer, said the exact amount of the earnings decline will depend on several variables, including the costs of the transition process to a new supplier, Kmart's potential need for extended services beyond the contract period and overall ramp-down costs, encompassing the transfer of inventory, reallocation of transportation fleet and warehousing equipment and employee transition costs.
Supervalu also said the contract termination will reduce its working capital requirements by about $65 million, which it said will be used for debt reduction.
