BANKRUPTCY 'THE ONLY CHOICE'

David Ghitelman

DALLAS -- Both large and small customers of Fleming here told SN they are continuing to receive product from the wholesaler that filed for bankruptcy last week, but most added that they are also making contingency plans should the distributor run into difficulty filling their orders.

Tom Haggai, chairman, IGA, Chicago, offered a ringing endorsement of Fleming's new management: Archie Dykes, Fleming's non-executive chairman, and Peter Willmott, the company's interim president and chief executive officer. Commented Haggai, "I have tremendous respect for them. Both have the right touch to be able to manage and rebuild this company. These two men are class people. They've got the right players, the right history."

Haggai cited the case of 7-Eleven, Dallas, as a company that emerged from bankruptcy to dominate its category. "Chapter 11 was just a starter for them."

Meanwhile, Haggai noted, "The relationship between IGA and Fleming remains seamless. We're in daily contact with the company. We were aware of every step they were trying to do."

However, if Fleming is unable to supply certain products, he added, "other companies will fill in."

Support for Fleming can be heard not only at IGA headquarters but at the store level as well.

Tom Stakes, general manager, Gribble's IGA, Loudonville, Ohio, told SN, "Fleming has been a good company for us, and we're going to stick with them." He mentioned that he'd been contacted by other distribution companies, but "has not done anything yet."

Stakes said, "Their service level is still very good." He cited as an example a delivery he had received from Fleming late last week. "There were 1.85% out-of-stocks on a delivery this morning. Any warehouse with only 5% out-of-stocks is doing a good job. There were only 12 items out of 700 that we didn't get."

A spokesman for Albertsons, Boise, Idaho, told SN his company was also in daily contact with Fleming. "They are currently living up to their service commitment, meeting delivery schedules, serving all stores on time with the right products, but we are monitoring the situation every day," he said.

Albertsons became a Fleming customer in mid-March 2002, when Fleming bought Albertsons' Tulsa, Okla., distribution center and received the distribution business of Albertsons' stores in Oklahoma and Nebraska.

The spokesman added that if Fleming becomes unable to meet its commitment, Albertsons could self-distribute from its Fort Worth, Texas, distribution center. "There's plenty of room in the Fort Worth DC," he said.

Some small independents, however, said they have been affected by changes since Fleming had filed Chapter 11.

Martin Reeser, vice president, operations, Landis Supermarkets, a two-store operator based in Telford, Pa., said, "The biggest area the Fleming bankruptcy has affected us is in perishables, particularly beef and chicken. My grocery level has been OK."

He added that Landis has had a secondary distributor for a while, Associated Wholesalers, Robesonia, Pa.

Randy Stepherson, president, Stepherson's Food Stores, a four-store operator based in Memphis, Tenn., said he has noticed "a little more out-of-stocks than usual, but nothing critical. It may get worse." And yes, he too has made contingency plans with another distributor.

Kim Brewer, part-owner and chief financial officer, Warren Bros., a four-store operator based in Marietta, Ohio, said the Fleming bankruptcy has affected operations, but not through out-of-stocks. "Some vendors -- manufacturers and resellers -- want to rearrange billing. They are setting up direct billing accounts with me." He has also made contingency plans.

James Semrad, president, Muskego Marketplace Foods, Muskego, Wis., which operates two Sentry Foods stores, said, "We haven't been affected so far. We're very capable of shifting over to our own system and paying our own bills. Our warehouse here has all the products it needs. And we have made arrangements to get another supplier." He added that he had made that arrangement late last month, before Fleming had filed for Chapter 11 protection.