Fleming Companies, Inc. (NYSE:FLM) announced today earnings guidance for fiscal years 2001 through 2003.
The company anticipates 2001 earnings to be $1.90 per share, 2002 earnings to be $2.50 per share, and 2003 earnings to be $3.30 per share, up from its previously announced $3.00 per share. Earnings guidance of $1.54 per share for fiscal year 2000 was confirmed in December. Fourth quarter and full-year earnings for 2000 will be released before the market opens on February 14, 2001. All of the earnings forecasts are adjusted for charges related to the company’s strategic plan initiatives.
The 2001 through 2003 earnings forecasts reflect the anticipated growth and profitability of Fleming’s new business opportunities. In particular, the company announced today that it has signed a $4.5 billion alliance with Kmart to provide substantially all of the food and consumable products in all current and future Kmart and Kmart supercenter stores. The Kmart business is anticipated to result in more than a 20% return on an investment of approximately $200 million. It will also add substantial volume that drives nationwide synergies throughout Fleming’s operations.
“Fleming is reaping the benefits of the strategic initiatives undertaken during the last two years,” said Mark Hansen, chairman of the board and chief executive officer of Fleming. “The changes we made to lower costs and improve our logistics infrastructure, including moves to central procurement and efficient consolidation of assets, have put us in a position to profitably take on business that others may find uneconomic. By serving our customers well, we are clearly serving our shareholders well with a projected compounded annual earnings growth rate of more than 30% from 1999 through 2003.”
The company plans to substantially reduce the strategic plan charges it has incurred over the past two years. The strategic initiatives, which gave rise to the charges, are nearly complete and remaining charges are currently expected to be approximately $20 million in 2001. Additionally, the earnings forecasts include the dilutive effect of the higher number of common shares outstanding following the equity investment made by The Yucaipa Companies, announced today.
Fleming Companies, Inc.
Fleming is a $15 billion company and industry leader in distribution and has a growing presence in value retailing. Fleming’s primary business is buying and selling merchandise. The company serves approximately 3,000 supermarkets, including more than 800 North American stores of global supermarketer IGA, 3,000 convenience stores and nearly 1,000 supercenters, discount, limited assortment, drug, specialty, and other businesses across the country. To learn more about Fleming, visit our website at www.fleming.com.
Safe Harbor Statement
- This release includes statements that:
- (a) predict or forecast future events or results;
- (b) depend on future events for their accuracy; or
- (c) embody projections and assumptions that may prove to have been inaccurate, including expectations for years 2001 and beyond.
These projections, forward-looking statements, and the company’s business and prospects are subject to a number of factors that could cause actual results to differ materially, including: the ability to achieve the expected synergies and anticipated cost savings from the Kmart alliance; unanticipated transition and start-up costs associated with the Kmart alliance; the ability to obtain required capital or obtain it on acceptable terms; unanticipated problems in the supply chain due to the increased volumes resulting from the Kmart alliance; unanticipated strategic plan charges; the ability to successfully generate new business; adverse effects of the changing industry environment and increased competition, sales declines, and loss of customers; exposure to litigation and other contingent losses; and negative effects of indebtedness and the limitations imposed by restrictive covenants contained in debt instruments. These and other factors are described in the company’s periodic reports available from the Securities and Exchange Commission.