Fleming Strikes Supply Agreement with Albertson’s

Discussion
Mar 19, 2002
George Anderson

Fleming has reached an agreement with Albertson’s, Inc., to provide procurement and distribution services to Albertson’s stores in two states. “Self-distributing retailers are looking critically at their supply chains to identify the most efficient alternatives,” says Mark Hansen, Fleming Chairman and CEO. “This arrangement with Albertson’s supports our strategy to further diversify our customer base and makes Albertson’s one of our five largest customers,” he adds.

Larry Johnston, Albertson’s Chairman and CEO, says “Our recent decision to exit several markets served by the Tulsa distribution center created an opportunity for Albertson’s and Fleming to work together. Fleming is a highly regarded wholesaler and this transaction allows us to both maximize shareowner value and increase supply chain efficiency.”

The five-year arrangement initially includes annualized sales volume of approximately $250 million. As part of the companies’ agreement, Fleming will acquire the Albertson’s distribution center in Tulsa to supply the 28 Oklahoma Albertson’s stores. Fleming’s Lincoln Division will supply the 11 Nebraska stores. The parties expect that this arrangement, which is subject to customary closing conditions in the agreement, will commence in July 2002.

Moderator Comment: What do you make of this agreement? Do you expect to see further deals between wholesalers and the large self-distributing chains in the future? [George Anderson – Moderator]

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