GRAND RAPIDS, Mich. — Spartan Stores on Tuesday said it would consolidate all of its distribution from a single warehouse here and that it may close a second warehouse facility in Plymouth, Mich.
The move will reduce expenses by between $2 million and $3 million annually and improve efficiency in Spartan’s distribution network, officials said in a statement. Spartan will incur a charge of between $1.5 million and $2 million in the fiscal fourth quarter related to the transfer.
The move comes as deteriorating economic conditions in Michigan have affected business at Spartan. The company said same-store sales declines for the third and fourth quarters would be in the mid-single-digit range, vs. earlier expectations of a low single-digit decline.
Spartan said its lease for the 415,000-square-foot Plymouth dry grocery facility is set to expire in October and that its contract with Teamsters Local 337 there is set for an April expiration. The company said it would negotiate with its 140 Plymouth employees prior to making a decision on closing the facility.
“As previously disclosed, we expected the near-term economic climate in Michigan to continue weakening and pressure our sales and earnings performance as the year progressed,” Dennis Eidson, Spartan’s president and chief executive officer, said in a statement. “Based on our current view of market trends and Michigan's nation leading unemployment rate of nearly 15%, these expectations are materializing. The economic climate in Michigan remains challenging due to the persistent high unemployment rate and tightening consumer spending patterns. In addition, we continue to experience price deflation in some high-volume product categories, pricing pressure in fuel and heightened competition in certain markets due to new store openings.”
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