AWG Posts Record Sales, Stock Split; Garland to Replace Retiring Phillips

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AWG Posts Record Sales, Stock Split; Garland to Replace Retiring Phillips

In tandem with posting a record $6.8 billion net sales and distributing a record $136 million in year-end patronage at its annual shareholders meeting over the weekend, Associated Wholesale Grocers (AWG) announced a changing of the guard with new executive leadership.

Gary Phillips, president/CEO of the Kansas City, Kan.-based retailer-owned wholesale cooperative, is retiring after 35 years of service, the past eight of which were as president, and will be replaced Jerry Garland as new president and chief executive. Mike Rand has been named new COO of the co-op that supplies over 1,800 independent supermarket operators in 21 states from eight distribution centers throughout the central and southeastern United States.

During his address to shareholders at the co-op’s annual meeting in Kansas City March 22 -- where it was also revealed that AWG’s 2008 annual sales represented a 20 percent, $1 billion increase over the previous year -- incoming president/CEO Garland spoke of the “immense talents and effort” Phillips has provided during the past 35 years “that have led to the success of our company. His passion for the success of the independent retailer established AWG as the fastest-growing food wholesaler in the country.”

During Phillips’ tenure as president, AWG’s sales and patronage reached record levels while operating expenses dropped every year as a percentage of sales. From 2000 to 2008, AWG’s sales rose from $3.2 billion to almost $7 billion, the largest increase in any seven-year period. Year-end patronage grew from $44 million to $136 million in the same time frame. AWG’s operating expense ratio, as a percentage of sales, remains among the lowest in the industry.

An 18-year AWG veteran, Garland has held many senior management positions with the company, most recently as EVP/merchandising. He has also served as SVP and division manager for two of AWG’s six grocery distribution facilities. Prior to joining AWG in 1991, Garland spent 24 years at Kroger in Dallas.

Rand, meanwhile, joined AWG in 1980, during which time his career has spanned the positions of SVP and division manager in both Oklahoma City and Kansas City, and most recently, EVP of the company’s wholesale operations, in which capacity six grocery distribution centers reported to him.

In related AWG financial news, the co-op’s year-end patronage rebate tallied 2.5 percent of qualifying warehouse sales, which marks yet another record for the co-op. All told, including allowances, AWG rebated $420 million to its members in 2008. In addition, AWG earlier this year redeemed two additional years of patronage certificates totaling $43 million. The co-op’s board also voted to accelerate the remaining patronage certificates by two years, making them redeemable in five years vs. the original seven-year issue.

Another highlight of AWG’s annual meeting was a two-for-one stock dividend for current shareholders, whose stock has risen in price every year since 1972. “Despite tough economic times, our retailers are doing a tremendous job of managing their business and meeting the needs of their customers,” said Garland. “As a cooperative, AWG distributes essentially all of its profits to those who generate them -- our member retailers -- to lower their cost of goods.”