UWG PURSUES NEW DELIVERY PROJECT TO REDUCE CONGESTION

LOS ANGELES -- Unified Western Grocers here is beginning work on "a unique project that could play a major role in helping to reduce daytime congestion by trucks and other delivery vehicles," Al Plamann, president and chief executive officer, said at the wholesaler's annual meeting here this month.He declined to discuss details of the plan, although he outlined other examples of Unified's commitment

LOS ANGELES -- Unified Western Grocers here is beginning work on "a unique project that could play a major role in helping to reduce daytime congestion by trucks and other delivery vehicles," Al Plamann, president and chief executive officer, said at the wholesaler's annual meeting here this month.

He declined to discuss details of the plan, although he outlined other examples of Unified's commitment to pursuing "ideas, concepts and systems that are literally on the cutting edge of technology or that represent best industry practices."

In its warehouses, for example, Unified has implemented state-of-the-art systems that have dramatically improved overall distribution efficiency, including a computerized yard management system for tractors and trailers and a new radio system that keeps order selectors efficient by telling them what to pick up next, and where.

The company has also installed processes that enable it to grow without incurring huge capital expenditures for new warehouses or additional employees, Plamann noted, including flow-through distribution for perishables that allows vendor products to be shipped directly to retailers on Unified trucks without storing them in any facilities, "and we look forward to expanding flow-through distribution to other areas of our business."

Unified was also the first company in Southern California to install pollution filters, known as particulate traps, on its 400 tractors to reduce toxic emissions and eliminate approximately two tons of soot from the atmosphere per year, Plamann said.

Unified is also adapting to the evolving marketplace by expanding its offerings of diet and health products, natural and organic products, and specialty foods, he noted.

"It is also incumbent that our buyers look for more than just the best price when purchasing products on behalf of our retail members and customers," Plamann said, "and toward that end we work hard to ensure that all buyers keep abreast of key changes to products and packaging [so they can] predict exactly what products will be purchased by tomorrow's consumers."

Plamann said 2004 was a good year for independent grocers, with Unified customers in California and the Pacific Northwest opening 58 new stores, "which very well might be a high-water mark for our company in a 12-month period." He said it appears Unified is on pace in 2005 to record a similar rate of growth.

For the first quarter ended Dec. 27, Unified sales fell 8.6% to $729.7 million, which the company said was due largely to the impact a year ago of the strike-lockout involving the three major chains in Southern California. "Although sales volume was not as high as it was during last year's labor dispute, our core business remains strong," Plamann said.

Net earnings rose 99% to $3.9 million, which the company said reflected improvements in gross margin and the results of continued efforts at controlling costs. "Investments we have made over the past several years to improve the efficiency of our distribution system are beginning to pay big dividends," Plamann said. "We have seen dramatic improvements in productivity at our warehouses during the past year, and now we're seeing how those numbers are having a positive impact on earnings."

Earnings before patronage dividends and income taxes rose 65.5% to $413.6 million. The company said strong earnings and operations performance generated cash flow of approximately $16.4 million, which enabled the company to reduce debt by $6.9 million to $194.4 million, compared with $201.3 million last October. Since 2002, Unified said it has reduced outstanding debt by $111.4 million.