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Fleming gives earnings outlook


DALLAS (AP) _ The bankruptcy and store closings announced by Kmart will reduce the per-share earnings for Fleming Cos. this year by at least 7.5 percent, or 20 cents, the company said Monday.

But Fleming said it would gain 40 cents per share in 2002 from a new accounting rule that eliminates the amortization of acquisition-related costs.

Fleming said it would earn 50 cents to 54 cents per share in the first quarter and $2.65 to $2.75 per share for all of 2002. Analysts surveyed by Thomson Financial/First Call had previously estimated earnings per share at 49 cents for the first quarter and $2.44 for the full year.

The food distributor said it would earn $3.40 to $3.50 per share next year, assuming that its sales to Kmart are $3.6 billion _ the company's new, lowered projection for this year. Sales to Kmart rose from $1.4 billion in 2000 to $3.1 billion last year.

Even if all Kmart stores were to fail, Fleming's per-share earnings this year would decline only 50 cents, chairman and chief executive Mark Hansen told analysts.

Fleming, based in a Dallas suburb, is Kmart's exclusive supplier of food and other consumable items.

Kmart, which is operating under bankruptcy protection, announced Friday that it would close 284 stores that account for $400 million in Fleming sales. Fleming expects its Kmart sales to fall an additional $500 million as shoppers steer clear of a retailer in bankruptcy.

The decline in Kmart sales would add to losses from Fleming's decision to stop shipments to Kmart in January when the retailer missed payments of $78 million. The shipments were resumed after a bankruptcy judge approved a $76 million payment to the distributor.

Fleming said it partly offset Kmart losses by cutting inventory and overhead costs.

Hansen, the Fleming chairman, said the Kmart closings would help Fleming by eliminating service to less-profitable stores. He said Kmart might close more stores ``in onesies and twosies, but our understanding is this is the big whack at things.''

In addition to Kmart, Fleming serves about 3,000 supermarkets, 6,800 convenience stores and 2,000 other retailers.
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