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The Penn Traffic Co. has signed a new procurement contract with C&S Wholesale Grocers, Inc., adding to the services the food wholesaler already provides the Northeastern grocer. C&S has supplied produce procurement services for Penn Traffic since March.
C&S has provided distribution and warehousing services for general merchandise and health and beauty products to Penn Traffic since March 2007.
The new eight-year contract extends those services to grocery, bakery, candy, spices, store supplies, deli, seafood, dairy, floral, frozen (mainline), frozen bakery, ice cream, fresh and frozen meat, frozen seafood, ice, and certain other merchandise, beginning next month.
Penn Traffic said the agreement is designed to allow it to focus more fully on customers and stores.
"We believe that this move will free up cash that would otherwise be tied up in inventory and trade receivables, improving our ability to reinvest in our stores and enhancing the service and value the company delivers to all customers," noted Penn Traffic president and c.e.o. Gregory J. Young. "C&S's expanded services will not change the way Penn Traffic and our associates select, merchandise, inspect, warehouse, and deliver product on our trucks to retail stores and wholesale customers."
Penn Traffic will continue to undertake outbound logistics and distribution from its warehouses to its retail stores and wholesale customers. The grocer's warehouse positions, drivers, and other transportation positions, category managers, and other merchandising functions will not be affected by the new contract, the company said.
However, it will eliminate a dozen corporate positions as a result of the new agreement. According to Young, "We'll work closely with affected associates to make the transition as smooth as possible."
Penn Traffic currently employs over 7,100 associates.
Due to C&S' considerable purchasing power, Penn Traffic said it expects that the new agreement will lead to a $17 million to $22 million improvement in availability by the end of the fiscal year, along with higher profitability and improved cash flow.
"This new procurement agreement is right in line with our strategy for rebuilding Penn Traffic, restoring profitability, and positioning the company for long-term success, which we began implementing last year," said Young. "We plan to continue executing our strategy, which includes focusing on our highest-potential and most-profitable stores, lowering expenses, and optimizing our wholesale business."
Syracuse, N.Y.-based Penn Traffic operates or supplies over 210 supermarkets in upstate New York, Pennsylvania, Vermont, and New Hampshire. Its retail food division includes corporate-owned stores with the P&C, Quality, and BiLo banners, and its wholesale food distribution business supplies independently operated supermarkets and other wholesale accounts.
Keene, N.H.-based C&S provides distribution services to grocery chains and independent stores, delivering to over 5,000 locations from distribution centers in Vermont, Massachusetts, Connecticut, New York, New Jersey, Maryland, Pennsylvania, South Carolina, Alabama, California, and Hawaii.