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LEWISVILLE, Texas -- Bankrupt grocery distributor Fleming Cos. Inc. said it would discontinue operations at five of the company's wholesale divisions and open a new convenience distribution center in Denver.
The Lewisville, Texas-based company, which filed for Chapter 11 bankruptcy protection in April, said it will focus its resources on its other wholesale distribution centers, "which have performed at a higher level and shown greater prospects for future growth and profitability."
By mid-June, the company will close its grocery wholesale divisions in Salt Lake City; Warsaw, N.C.; Northeast, Md.; and Phoenix. In addition, the company is closing a general merchandise distribution center in King of Prussia, Pa.
The closing divisions represent about $1 billion in annual revenue.
Fleming plans to immediately begin transferring inventory from the closing divisions to other facilities. The company said its convenience distribution centers are unaffected by the closing of the five wholesale divisions.
"While the decision to exit any market is difficult, it makes excellent sense for us to scrutinize our operations and concentrate our human and financial resources on those business units and markets in which performance is highest and opportunities are greatest," said Bill May, president and CEO of Fleming's wholesale distribution division, in a prepared statement.
"The previously announced loss of business at these divisions and their limited growth opportunities has made it impossible for us to continue in these markets as a core part of Fleming operations," May said. "After careful study and consideration, it was decided to take this necessary action to advance our restructuring, which is important to our company and our aggregate customer base."
The company also is reviewing alternatives for its Minneapolis division, which is entirely dedicated to supplying its Rainbow Foods stores based in Hopkins, Minn.
Earlier this week, Fleming said it has agreed to sell 31 of the stores to Roundy's Inc., a Pewaukee, Wis.-based grocer, for net cash proceeds of $42.5 million for noninventory assets and $40 million for inventory. Roundy's also is expected to assume about $35 million of long-term capital leases.
Fleming said its new convenience division in Denver replaces the previous Denver division, which was destroyed by fire late last year. In the interim, Fleming has supplied its Denver customers with products from other convenience divisions in the region. The Denver division's official opening is set for May 16.