EAGLE SIGNS ON FLEMING FOR NONFOOD PRODUCTS

RANDY WEDDINGTON

MILAN, Ill. -- Eagle Food Centers here signed a supply arrangement last week with Fleming Cos., Dallas.

Under the agreement, Fleming will deliver health and beauty care, and general merchandise to the 64-store chain, which operates under the trade names Eagle Country Market and BOGO's Food and Deals in central Illinois and eastern Iowa.

"The strong seasonal programs that Fleming offers was one of the compelling reasons to choose them as our supplier for health, beauty care and general merchandise," said Jeff Little, Eagle president and chief executive officer, in the announcement. "We are confident that Fleming provides the best value proposition for our company and customers."

Little, who joined Eagle in his present positions on Jan. 31, 2000, had previously worked for Fleming. Beginning early in 1998, he first served as vice president, marketing, for Fleming's retail group, then as president of its ABCO Desert Markets division from March 1998 to June 1999.

Eagle's Country Markets are full-line supermarkets, a format their management introduced in 1991. They reportedly range widely in size, with an average of over 39,000 square feet. Among the additional offerings in selected stores are banks, dry cleaners, coffee shops, video rental, floral service and prescription medicine.

The single BOGO's utilizes a limited assortment, reportedly about 2,000 total stockkeeping units of major categories (including HBC and general merchandise).

Following an unsuccessful 1999 search for a business partner, Eagle filed for Chapter 11 bankruptcy protection in February 2000. It emerged in August 2000 after replacing $100 million in senior notes with new ones and closing roughly 25% of its stores.

Nasdaq trading of Eagle stock, which had been halted with the Chapter 11 filing, resumed last August.

Prior to signing with Fleming for nonfood, the retailer was supplied by Supervalu, Eden Prairie, Minn., said Stan Stephens, Eagle senior vice president, retail.

He added that "we're self-supplied on everything else, and we have our own warehousing."

Besides Fleming's extensive stock of seasonal merchandise for all holidays, Stephens said, the distributor offers other advantages for Eagle, including the flexibility to add other requested products from suppliers that Fleming does not stock.

Regarding Fleming, "they're a wholesaler that's very sensitive to the needs of the retailer," he said, "and they're very focused on driving costs out of the business. It's a way of life at Fleming. Combined with what they offer seasonally, they bring a lot to the table."

Neither Stephens nor Shane Boyd, Fleming's vice president of communications, would discuss details of the agreement. Boyd did comment, though, that "the dollar amounts are certainly significant, since we don't issue news releases on every new customer."

The Eagle agreement will bolster Fleming's growth strategy.

"We appreciate the commitment by Eagle in selecting Fleming to serve their business," said Andy Anderson, Fleming senior vice president, central operations, in a company statement. "We're committed to growing Fleming's General Merchandise Divisions for the benefit of all our retail customers."

In March Fleming released its 2001 goal of $1 billion in "new gross annualized business," which is "in addition to the previously announced $4.5 billion alliance with Kmart." It noted that it had exceeded this figure in both 1999 and 2000.

In furtherance of this latter alliance -- which Fleming said "includes the procurement and distribution of substantially all food and consumable products to Kmart's stores" -- the distributor announced April 3 that it will open a new Fort Wayne, Ind., division in July 2001.

"This decision comes after careful analysis and review of the business operations needed to successfully service our Kmart customers as well as other retailers in the region," said Steve Davis, Fleming executive vice president and president, wholesale, in the announcement. "Our focus now is on the smooth transition of Kmart business to the growing Fleming distribution network and on continuing to provide quality service and products to all of our retail customers."

Last week the company also disclosed its agreement to acquire two warehouses -- in Suffield, Conn., and Perryman, Md., from Supervalu.

"These distribution facilities will provide important geographic coverage that allows Fleming to expand its distribution network north to Maine," said Davis.

With new customers and new facilities, Fleming -- currently a $14 billion company -- continues to grow. It presently serves about 3,000 supermarkets, 3,000 convenience stores and "nearly 1,000 supercenters, discount, limited assortment, drug, specialty and other businesses across the country."