business news in context, analysis with attitude

Fleming Cos. announced that its shipment of groceries to Kmart Corp. will formally cease on March 7 or March 8, and will have no further obligations to the retailer.

What was supposed to be a 10-year, $45 billion deal fell apart last week after just a couple of years, as Kmart’s store count diminished during its bankruptcy.

Kmart says it will self-distribute groceries in the immediate future, and estimates the savings of such a move at $100 million over the next year. Fleming raised its fees to Kmart twice because of declining volume; Kmart charges that Fleming’s service levels were going down as its prices were going up.

While there is an agreement when the trucks will stop rolling, there apparently is no agreement about when Fleming will get paid for the goods it is shipping. While Kmart has been paying the Friday after delivery, there have been no assurances that this will continue now that their agreement has been severed.
KC's View:
Hard to imagine that self-distribution of groceries is going to be easy for Kmart…after all, it self-distributes non-food products, and one of the main complaints about Kmart always has been about out-of-stocks.

We’ll see.