Fleming (NYSE:FLM) yesterday announced that Kroger Co. (NYSE:KR) has agreed to purchase the 16 retail stores operated by Baker’s Supermarkets, located in the Omaha, Nebraska, area.
Kroger is expected to offer employment opportunities to substantially all of the Baker’s Supermarkets associates involved with the operations. The transaction should be finalized within 90 days.
Fleming has also signed a three-year supply agreement with The Kroger Co. to continue supplying Baker’s Supermarkets from the Lincoln product supply center. “The supply agreement with Kroger again validates our outstanding distribution value proposition that is recognized as a key to growth from the independent retailers to the chain retailers,” said Mark Hansen, chairman and CEO of Fleming.
Baker’s Supermarkets was opened in 1927, with its first store in Walnut, Iowa. Founders Abe and Helen Baker are credited with institutionalizing the strong customer service philosophy that remains the foundation of Baker’s operating strategy. In 1992, Baker’s was acquired by Fleming.
“This transaction will open a new market for Kroger and provide exciting growth opportunities in the Midwest,” said Joseph Pichler, Kroger chairman and chief executive officer.
The Baker’s Supermarkets are being sold as part of Fleming’s previously announced strategic plan that focuses on its growth areas. “We are pleased that the execution of our strategic plan is progressing,” said Mark Hansen. “This transaction underscores our belief that the conventional supermarket segment offers local-market growth potential for independents and national growth potential for consolidators. We continue to focus our financial and management resources on growing value retailing and improving distribution operations.”
Fleming is also in various phases of discussions to sell 53 ABCO Desert Markets and 24 Sentry stores to other retailers. As announced yesterday, the company expects to receive approximately $200 million in proceeds in 2001 from the sale of conventional retail stores as well as retention of a significant portion of the wholesale distribution to these stores.
In addition, the company stated yesterday that despite the current soft consumer spending environment, it expects to deliver $0.52 adjusted earnings per share for the 4th quarter, consistent with the guidance provided in October. This will be five consecutive quarters with improved year-over-year distribution sales and earnings growth which is nearly 40 percent greater than 1999.
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, 3,000 convenience stores and nearly 1,000 supercenters, discount, limited assortment, drug, specialty, e-tailers and other businesses across the country.
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 which may prove to have been inaccurate, including expectations for years 2000 and beyond.
These projections, forward-looking statements and the company’s business and prospects are subject to a number of factors which could cause actual results to differ materially, including: adverse effects of the changing industry environment and increased competition, sales declines and loss of customers, exposure to litigation and other contingent losses, failure to implement strategic initiatives according to plan or to achieve the expected results of such plan, failure of the company to achieve necessary cost savings, and negative effects of the company’s substantial indebtedness and the limitations imposed by restrictive covenants contained in the company’s debt instruments. These and other factors are described in the company’s periodic reports available from the Securities and Exchange Commission.