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Food distributor halts shipments to Kmart

Tuesday, January 22, 2002

DALLAS -- A major food distributor said Monday that it has cut off most shipments to Kmart after the troubled discounter failed to make its regular weekly payment for deliveries.

Fleming Cos. said Kmart, its largest customer, owes $78 million.

Kmart chief executive Charles Conaway said the company was negotiating a plan to resume shipments from Fleming, once Kmart officials work through "financial issues and are able to provide Fleming with adequate assurance of payment."

Kmart's credit rating and stock plunged this month after the company said it did no better than break even in 2001, blaming disappointing holiday sales. It also said it was in discussions with its lenders about financing.

Fleming, the nation's second-largest wholesale food distributor behind Supervalu, supplies about 3,000 supermarkets, 6,800 convenience stores and 2,000 mass merchandisers.

Just a week ago, Fleming said its relationship with Kmart was strong. But this week, the company said it has stopped all shipments except some perishable food that was already en route to Kmart stores and Super Kmarts.


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