Newspaper article THE JOURNAL RECORD

Fleming Reports Net Loss for 1998, 4th Quarter

Newspaper article THE JOURNAL RECORD

Fleming Reports Net Loss for 1998, 4th Quarter

Article excerpt

OKLAHOMA CITY (JR) -- Fleming Companies on Thursday reported a net loss of $510.6 million, or $13.48 per share, for 1998.

The loss was the result of a pretax charge of $668 million from impairment, restructuring and other charges related to its new strategic plan. Earnings for the year would have been $32.3 million, or 85 cents per share, excluding these charges.

Net earnings for 1997 were $25.4 million, or 67 cents per share, after an extraordinary charge related to refinancing the company's debt and a litigation settlement. Earnings for 1997 would have been $49.9 million, or $1.32 per share, excluding the charges. Sales for 1998 totaled $15.1 billion, down slightly from $15.4 billion in 1997. Fleming has taken a series of steps to restructure and reorganize since naming Mark Hansen, former president and chief executive officer of Sam's Club, chairman and CEO in early December. Hansen replaced Robert E. Stauth, who left Fleming in July after a weekend board of directors meeting. "Fleming's disappointing 1998 financial results underscore why we are taking decisive steps with our strategic plan to improve our performance," Hansen said Thursday. "While we gained significant new business and improved our margin management in our food distribution operations, we must do a better job in building sales and in controlling expenses to support our customers' success." Same-store sales as well as expense controls remain major issues for several of Fleming's company-owned retail chains. Fleming serves about 3,000 supermarkets, including 280 company-owned stores, in 42 states. "We are concentrating our resources in our top-performing chains and evaluating every retail group's long-term performance potential to improve overall results going forward," said Hansen. The loss for the fourth quarter was $537.2 million, or $14.11 per share, including a pretax charge of $660.9 million for impairment, restructuring and other charges related to its new strategic plan. Excluding these charges, earnings would have been $2.3 million, or 6 cents per share. For the fourth quarter of 1997, Fleming reported earnings of $11.1 million, or 29 cents per share. Sales for the fourth quarter were $3.56 billion, down 1.6 percent from $3.62 billion for the fourth quarter of 1997. In addition to the impact of special charges, fourth quarter earnings were adversely affected by lower operating earnings for the retail food segment, higher corporate expenses, and lower interest income. These results were offset in part by improved gross margins in the food distribution segment, improved equity investment results, and lower interest expense. Annual food distribution operating earnings were $259 million in 1998, down from $283 million in 1997. Food distribution segment sales for 1998 were $11.5 billion, down from $11.9 billion in 1997. Operating earnings for the food distribution segment were adversely affected primarily by restructuring-related costs and lower sales. Operating earnings for the retail food segment for 1988 were $62 million, down from $80 million in 1997. Net sales for 1998 were $3.6 billion, up from $3.5 billion in 1997. The retail food segment's operating earnings were adversely affected primarily by a 3.6 percent decrease in same-store sales and by higher labor costs. During 1998, the company added 16 new stores, remodeled 43 locations, closed 10 locations and expanded technology systems in its company-owned stores. Corporate expenses decreased 4 percent to $122 million in 1998 from $127 million in 1997. For 1998, estimated earnings before interest, taxes, depreciation and amortization was $421. …

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