BI-LO and Bruno's Announce Key Elements of the Company's New Business Plan
Third-Party Distribution Agreement Signed With C&S;
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Systems Integration and Corporate Support Function Consolidation to Begin
Greenville, South Carolina, January 10, 2005 - BI-LO Holdings, LLC, the parent company of BI-LO, LLC and Bruno's Supermarkets Inc., today announced key elements of the company's new business plan, which is designed to position the supermarket business for long-term success.
As part of the business plan, BI-LO and Bruno's will transfer the ownership of its warehouse facilities and management of its distribution and replenishment functions to C&S Wholesale Grocers, Inc. The company will also begin integrating Bruno's information technology systems with BI-LO's systems, and will also consolidate the corporate support functions of both chains at BI-LO's headquarters office in Mauldin, South Carolina.
Dean Cohagan, President and CEO of BI-LO and Bruno's said, "After a careful and comprehensive analysis of our business performance and future prospects, we have developed a plan that is designed to make our company more efficient by reducing costs and more responsive by simplifying the way we do business. The plan is also aimed at focusing our efforts and resources more sharply on what we do best - operating great supermarkets and providing exceptional customer service.
"We have succeeded in finding a new owner that is excited about investing in the fast-growing Southeast marketplace and in keeping BI-LO and Bruno's together as one organization. We will now be an independent regional business - a fast-moving and flexible company that will take quick and decisive action based on the needs of our business, our customers and the unique competitive dynamics of the local and regional markets in which we operate. Our goal is to be the best supermarket in the Southeast," said Mr. Cohagan.
Distribution Agreement with C&S
The company and C&S, a food distributor based in Keene, New Hampshire, have reached a definitive agreement under which C&S will assume ownership of warehouse facilities when the transaction closes and management of distribution and replenishment activities over the next several months. The financial terms of the agreement were not disclosed.
Under the distribution agreement, C&S will purchase BI-LO's distribution centers in Mauldin, South Carolina, and Chattanooga, Tennessee, as well as a third center in Birmingham, Alabama that primarily services the Bruno's chain. The centers handle product shipments from hundreds of vendors and then distribute grocery and food products to more than 450 BI-LO and Bruno's supermarkets throughout the Southeast. Preparation for the transition to C&S will begin immediately and proceed over the next several months. The transition is expected to be completed by mid-year 2005.
All 1,650 employees who currently work in the three distribution centers will be offered positions with C&S.
C&S is a privately owned company with more than $13.5 billion in annual sales. C&S distributes to more than 3,500 stores and warehouse clubs from its 42 distribution centers in Vermont, Massachusetts, Connecticut, New York, New Jersey, Maryland, Ohio, Pennsylvania, California and Hawaii.
"We are excited about the agreement with C&S because it is a win-win for our business and our Associates," said Mr. Cohagan. "The agreement will enable our business to focus our efforts on our core retailing activities and allow us to free up capital to reinvest in store development and systems. In addition, our business will benefit by gaining access to the best-in-class distribution expertise and greater supply chain efficiencies that C&S offers in the most cost-effective way possible."
Commenting on the agreement, Rick Cohen, C&S CEO, said, "We welcome all of our new employees to the C&S team and are working hard to ensure a smooth transition. Combining the strength of C&S's distribution expertise with the experience and commitment of the newest members of our team, we hope to make a significant contribution to BI-LO and Bruno's future success. We are looking forward to working closely with BI-LO and Bruno's and providing efficient and innovative distribution services to their stores. We are very excited to be able to enter the Southeast market with such a well-established and respected supermarket business."
Systems Integration and Consolidation of Corporate Support Functions
Other key elements of BI-LO and Bruno's business plan include the integration of Bruno's information technology systems with BI-LO's systems, as well as the consolidation of the corporate support functions of both chains at BI-LO's office in Mauldin.
Bruno's current accounting, merchandising, pricing, payroll and store systems will be integrated into BI-LO's systems. Once the store systems conversions are completed, BI-LO and Bruno's stores will operate under common systems.
The goal is to eliminate redundancies in systems and to reduce overall operating costs. By unifying its systems, the company expects to become more competitive and responsive in meeting the needs of its customers.
Like the systems integration initiative, the consolidation of the corporate support functions of
BI-LO and Bruno's in Mauldin is aimed at reducing costs and eliminating duplications. The consolidation will begin immediately and is expected to be completed in the third quarter of 2005.
As this consolidation proceeds during 2005, approximately 175 positions at Bruno's headquarters office in Birmingham will be affected. People whose jobs are affected will be treated fairly. The company has a long track record of ensuring that Associates whose positions are eliminated receive severance and all the benefits to which they are entitled. In addition, the company will provide outplacement and other related services to assist Associates in making a smooth transition to other employment.
The functions that will be consolidated in Mauldin include: finance and accounting, merchandising and marketing, risk management, legal, human resources, information technology, office services/print shop, real estate/property management, pharmacy and check recovery. Bruno's store operations, labor relations and field support positions will remain in place in Birmingham. Local support positions will also include: real estate, human resources, maintenance, sales, loss prevention, pharmacy and community relations.
"To succeed as an agile and efficient regional supermarket business, it is imperative that BI-LO and Bruno's operate as one organization, while maintaining the distinctive banners that millions of customers admire and trust and continuing our long heritage of support for our local communities," said Mr. Cohagan.
"Our customers will not notice any changes in their shopping experience. They will see for themselves that we are all still focused on providing exceptional service and the same great value that they have come to expect from us," Mr. Cohagan concluded.
About BI-LO and Bruno's
BI-LO operates 287 stores in South Carolina, North Carolina, Georgia and Tennessee, and employs approximately 23,000 Associates. Bruno's operates 168 stores in Alabama, Florida, Georgia and Mississippi, and employs approximately 11,500 Associates.
About C&S
C&S is a privately owned company with annual sales of over $13.5 billion. The company is the eighth largest privately held company in the nation, as ranked by Forbes magazine. Founded in 1918, C&S provides distribution services to grocery chains and independent stores, delivering to more than 3,500 locations from its 42 distribution centers in Vermont, Massachusetts, Connecticut, New York, New Jersey, Maryland, Ohio, Pennsylvania, California and Hawaii.
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