AWG Taps Garland as New CEO

ELLIOT ZWIEBACH

KANSAS CITY, Kan. — Associated Wholesale Grocers here was expected to name Jerry Garland as its new president and chief executive officer at its annual meeting yesterday, succeeding longtime company veteran Gary Phillips.

In an interview with SN last week before the meeting, Garland said he hopes to continue to grow the cooperative through wholesale and retail mergers and acquisitions.

On the wholesale front, “there's plenty of potential, but nothing active at this point,” he said. “But we're constantly being asked [by non-members] where the closest distribution center is, so we are also looking for opportunities to build new facilities.”

He said the company was seeking to expand in areas contiguous with its current operating regions, after doubling in size over the past decade.

Phillips, 62, joined AWG in 1974 as an accountant. In 1977 he was named director of administrative services for the company's Springfield, Mo., division, and in 1983 he was promoted to senior vice president and division manager; he was named executive vice president and AWG's first-ever chief financial officer in 1996 and, four years later, president and CEO.

Under his leadership, AWG progressed from a $3.2 billion company serving 850 retail stores across 10 states out of four distribution centers to a company of $6.85 billion serving 1,800 retail stores across 21 states from eight distribution facilities.

Some of the cooperative's growth came from a series of acquisitions, including the purchase of 44 Oklahoma locations from Homeland Stores in mid-2002; three former Fleming facilities in Tennessee and Mississippi in mid-2003; a Fort Worth, Texas, warehouse from Albertsons LLC in 2006; and 26 stores from United Supermarkets of Oklahoma in early 2008.

Garland, 58, has been with AWG for 18 years after working 24 years in the Dallas division of Kroger Co., Cincinnati; his title before yesterday's promotion was executive vice president, marketing.

Joining him on AWG's executive team will be Mike Rand, 56, in the new post of chief operating officer. Rand, a 29-year AWG employee, has been executive vice president, operations.

According to Garland, Rand will focus on driving down distribution costs — something he's done for the last eight years. “As a cooperative, our expenses have a great deal to do with the prices our retailers pay, so lowering the cost of distribution lowers the cost of goods to members,” Garland explained.

AWG members were expected to get a dose of good news at yesterday's annual meeting, concerning financial results for the fiscal year that ended Dec. 27, including:

The company also announced its first two-for-one stock dividend since 1987.

According to Garland, “Despite tough economic times, our retailers are doing a tremendous job of managing their businesses and meeting the needs of their customers.”

Based on those results, Garland told SN, he believes the independent operator is stronger today than he has been in years, “with the flexibility to respond quickly to the needs of his customers. And with the kind of tools we offer, he's thriving.”

Garland said AWG's biggest challenge going forward is top-line growth.

“Our members have shown great resiliency as they've adapted to the changing needs of consumers, with half of our growth coming from existing stores and half from new members. The existing members are doing very well, particularly in the areas of meat, produce and private label.”

He said private-label sales, which exclude milk and bread, represent 24% of cases, compared with about 23% a year ago.