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Roundy's to Close Two Distribution Facilities

MILWAUKEE - Roundy's, Inc. here said yesterday it will close its Eldorado, Ill. and Evansville, Ind. distribution centers, both of which service independent grocery operators in the southern half of those states as well as in Kentucky, Tennessee, and Missouri. The closures will reportedly result in the loss of 252 jobs.

Lynn Guyer, Roundy's director of communications, told Progressive Grocer: "The move follows a strategy of consolidation to have the best utilization of assets" as part of an ongoing effort to refocus Roundy's distribution network on cost advantages in purchasing, transportation and other operational areas.

Roundy's is planning for a 90-day transition period and expects the two facilities to formally close their doors in September 2004. The financial effect of the closures and consolidation is not expected to be material to the company's current or future results of operations or financial position.

After the transition, the company expects to continue supplying a portion of its current Eldorado and Evansville retail customers from its distribution center in Lima, Ohio, while also servicing its other customers from a network of five strategically located distribution centers, including a new 1.1 million-square-foot depot in Oconomowoc, Wis., that is currently under construction and scheduled to open in 2005.

Guyer said approximately 116 customers are affected by the closings of both distribution centers, but she could not confirm the number of customers who will reassign their business to other suppliers or speculate on who those suppliers may be.

Supervalu and Nash Finch come readily to mind as viable candidates to pick up supplies duties for the stores. Said Jason Whitmer, analyst at FTN Midwest Research Securities, an institutional equity research firm headquartered in Cleveland: "Supervalu and Nash Finch, or anybody who has substantial volume in the Midwest, would come to mind. But in the normal course of business, when somebody chooses to leave various accounts on the table, everybody else will try to grab them if it makes sense. But nobody these days is going to add accounts just to add accounts. In fact, that's been something Supervalu has taken a different position with in the last couple years, by not being as focused on sales volume as they have been focusing on operating margins and sufficient cash flow to maintain bottom line profits."
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