Harmons is switching its main distribution company from Dallas-based Fleming Cos. Inc. to Salt Lake-based Associated Food Stores Inc.
The Harmons contract represented about $100 million in annual revenue, Fleming said Friday. Fleming said it will retain the secondary supply business for Harmons. The transition is expected to occur in the next 90 days.
"Harmons has enjoyed a long relationship with Fleming, and we hold the efforts of your Salt Lake Division associates in the highest regard," said Dean Peterson, president of Harmons, in a prepared statement.
Harmons, which operates 10 supermarkets in Utah and is scheduled to open an 11th store in Draper in October, said the change to Associated Foods was based on the distributor's Utah ties and ability to provide local relationships and contacts with vendors, brokers and manufacturers.
"Associated Food Stores has the most modern and up-to-date distribution facility and truly understands the needs of the Utah market," according to prepared remarks from Harmons.
Neither Harmons nor Associated would confirm the amount of the companies' contract. Associated Foods had 2001 revenues of more than $1 billion. Fleming posted 2001 revenue of $15.6 billion.
"We are very excited about it," said Steve Dunham, a spokesman for Associated Foods, a wholesale distributor to nearly 600 independently owned supermarkets in an eight-state region.
On Thursday, Fleming warned it might miss its earnings forecast for the second half of the year, blaming poor performance at its retail operation.
The marketing and distribution company serves approximately 3,000 supermarkets, 3,000 convenience stores and nearly 1,000 supercenters in the United States.
In a press conference, the company also fielded numerous questions regarding a Thursday article in The Wall Street Journal that focused on complaints by vendors who say Fleming has refused to pay them in full for shipments, taking disputed deductions on invoices.
Separately, Fleming Friday said it has gained nearly 100 former retail customers that had previously been served by Nashville-area distributor C.B. Ragland Co., a supplier that announced last month it will exit the wholesale grocery business.
Fleming expects to add about $100 million in annual revenue from the former Ragland customers, which will all be fully shifted to Fleming by Oct. 5. Company spokesman Randy Hatcher said the new business will "more than offset" the effect of the lost Harmons contract.
C.B. Ragland served about 250 grocery stores in Alabama, Georgia, Kentucky, North Carolina and Tennessee.
New York Stock Exchange-listed Fleming stock, which has declined since trading as high as $29.60 a year ago, closed Friday at $6.90, down 2 cents.
Contributing: Dow Jones/AP