Supervalu (Minneapolis) will merge its Easton, Pa., Harrisburg, Pa., and Perryman, Md., operations into its 1.4 million sq.-ft. facility in Lancaster, Pa. In conjunction with this consolidation, the grocery retailer and distributor plans to invest in additional automated inventory management technology at the seven-year-old facility.
"Our overall vision is to deliver the best supply chain services to our corporate and independent retailers," said Janel Haugarth, Supervalue executive v.p., and president and COO of the company's Supply Chain Services group. “This project enhances our commitment toward that vision.”
As a result of the consolidation, the company expects to incur after-tax charges over three years of $30 to $35 million, including $23 to $26 million for lease exit costs, severance pay and other employee related costs. Capital costs associated with the technology installation are included in Supervalu's previously announced $1.2 billion fiscal 2008 capital program. Company executives expect the consolidation project to take three years to complete.
"The decision to combine the consolidation with the installation of the supply chain automation technology represents an additional opportunity to deliver long-term strategic benefits,” said Jeff Noddle, Supervalu chairman and CEO.
Supervalue is one of the largest grocery companies in the United States with annual sales approaching $40 billion. The company has 2,500 retail locations, and provides distribution and related logistics support services to more than 5,000 grocery locations.