OKLAHOMA CITY -- Fleming Cos. here said last week that net earnings for the third quarter, fourth quarter and fiscal year will be below analysts' expectations due to increased re-engineering costs and other factors.
Results for the third quarter will be released Oct. 25; the company's fiscal year will end Dec. 30. Industry consensus had put earnings for the third quarter at 30-31 cents per share and earnings for the year at $1.60-1.72. After Fleming's disclosure last week of its more modest earnings expectations, some analysts lowered their estimates to 10 cents per share for the quarter and about $1.15 for the year. The company said costs for its 10-month old Vision 2000 re-engineering project were "beyond expectations," which adversely affected third quarter performance. Other factors impacting third-quarter results included weak sales; unexpectedly higher credit loss expenses and unanticipated charges for certain closed retail stores previously subleased to customers. "While appropriate steps are underway to address these factors, we expect financial performance to be below analysts' consensus expectations for the fourth quarter and full year," the company said. Nancy Del Regno, vice president, corporate communications and public affairs, told SN, "We knew the re-engineering experience would hit unevenly from quarter to quarter, and we compacted a lot of activity into the third quarter, during which sales are traditionally at the low point of the year. "But there's nothing to be unduly concerned about. We are ahead of schedule on re-engineering -- 17 locations rather than the 15 previously designated have already been converted to the Fleming flexible marketing plan." Gary Vineberg, a securities analyst with Merrill Lynch, New York, said observers had expected 1995 to be a tough year for Fleming "because the company was accelerating its re-engineering expenses into this year, and it was expected that 1996 would be better. "But now Fleming is saying things will be cloudy going into 1996, so next year, which was supposed to be a turnaround year, looks to be as tough as 1995 has been."