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DALLAS - Fleming Cos. Inc., the No. 2 U.S. wholesale food supplier behind Supervalu Inc., today reported a 52 percent increase in third quarter 2001 net earnings to $22.8 million, or $0.47 per share, after adjustments to exclude strategic plan charges and one-time items, compared to $15.0 million, or $0.37 per share, in the third quarter of 2000.
With total sales just above $4 billion and net distribution sales of $3.5 billion for the 12-week quarter, Fleming took over the top position as the largest distributor in its industry following the successful integration and first full quarter of operations of the Kmart alliance. Third quarter adjusted operating earnings of $68.1 million increased 9.5 percent from $62.2 million in the prior year. Adjusted EBITDA increased to $110.2 million in 2001 from $106.7 million in 2000.
"Fleming emerged from the third quarter as the leading distributor in our industry," said Mark S. Hansen, chairman of the board and CEO of Fleming. Total company net sales for the 12-week third quarter were $4.02 billion, compared to $3.19 billion in the prior year, a 26 percent increase. Distribution accounted for 88 percent of net sales, up from 78 percent in the prior year, while retail accounted for 12 percent of net sales. The shift in sales mix between distribution (with its higher volumes and lower margin percentages) and retail is a factor in the comparison of margin percentages between the two years.
Distribution segment net sales increased 42 percent to $3.54 billion, up from $2.50 billion in the prior year. "Our distribution sales grew dramatically, attributable in large part to our alliance with Kmart. However, it's important to highlight the growth of the other conventional and alternative retailers we serve, including independent supermarket operators, convenience stores, supercenters, self-distributing grocery chains, and ethnic retailers," said Hansen. Approximately 11 of the 42 percentage point increase was attributable to customers other than Kmart.
Third quarter 2001 retail sales of $484.4 million declined compared to the prior year's $693.6 million. However, sales of continuing operations jumped 21 percent in the third quarter to $453.8 million compared to $375.9 million in 2000. Comparable store sales were up 1.5 percent for the quarter.