FLEMING TO PURCHASE H. G. HILL STORES

PATRICK SCIACCA

OKLAHOMA CITY -- Fleming Cos. here last week said it will purchase the family-owned H.G. Hill Stores chain in Nashville, Tenn., bringing the wholesaler a $75 million boost in supply business.

As part of the agreement, Fleming would oversee the sale of the stores to independent operators, which would then be supplied exclusively by Fleming's 700,000-square-foot, Goodlettsville, Tenn., distribution center. The retailer is now self-distributing.

"Fleming has bought the name and operations," said Ashley Caldwell, a fourth-generation member of the H.G. Hill family and director of community relations for the retailer. She added that H.G. Hill sees the "strategic alliance" as a positive way to preserve the family name and maintain a high quality of product for its consumers.

H.G. Hill has been a staple business in the Nashville area for 103 years, Caldwell said.

The Goodlettsville warehouse, which services about 300 stores in 10 states, has become Fleming's main distribution facility in Tennessee, and its Johnson City, Tenn., warehouse is to be closed by mid-1999 in an effort to streamline operations.

Fleming said the deal is "early in the process" and there have been no independent operators named to take over any of the H.G. Hill stores, but some of Fleming's current independent operators are under consideration.

"There are operators we supply that would be good candidates," said Nancy Del Regno, vice president of communications for Fleming, noting that Fleming's business analysis shows good growth potential for the Nashville area.

All 14 stores would continue to operate under the H.G. Hill banner and H.G. Hill Realty, a separate business, would retain ownership of the property and the stores.

Because of heightened competition, H.G. Hill did not have the capital to grow and compete, according to Caldwell, adding it was either "grow or consolidate."

As examples, Caldwell cited the entrance of Wal-Mart, Bentonville, Ark., and Harris Teeter, Charlotte, N.C., to the Nashville-area marketplace.

H.G. Hill's main office and warehouse facility would be closed and about 100 of the almost 1,000 H.G. Hill Food Stores employees would be casualties of the sale.

Caldwell said that warehouse, engineering, human resources, data processing and marketing employees would be most affected by the closing, adding that employees would be offered severance packages if they are not hired by Fleming.

"There are some great people [at H.G. Hill] and we plan to conduct interviews and evaluate our needs in Nashville," said Del Regno.

The retailer said the sale should be completed in about 60 to 90 days.