DALLAS, Jan. 21 (UPI) -- Fleming Cos. Monday suspended most shipments to financially troubled Kmart after the giant discounter failed to make its regular weekly payment.
Fleming said the only shipments continuing are perishables already in transit.
"Fleming is working with Kmart as they navigate through their current financial problems and we intend to resume delivery of food and other consumable products to Kmart upon receiving satisfactory assurance of Kmart's performance," Neal Rider, executive vice president and chief financial officer, said in a statement. "We are also taking the appropriate steps to protect Fleming's interest."
Fleming filed a reclamation claim to enable it to recover payment for unpaid inventory, currently about $78 million.
Fleming and Kmart signed a 10-year agreement last year, making Kmart Fleming's largest customer. The agreement put Kmart on a seven-day invoice cycle.
Kmart's Chief Executive Officer Charles C. Conaway said he hopes financial arrangements can be worked out so shipments can resume.
Fleming serves some 3,000 supermarkets, 6,800 convenience stores, and more than 2,000 supercenters, discount, limited assortment, drug, specialty and other stores across the United States. It is among a growing list of suppliers to suspend shipments, including Scotts Co., maker of Miracle-Gro plant food and other garden products.
Martha Stewart last week threatened to sever her relationship with Kmart if the company files bankruptcy.
The Wall Street Journal reported a retail consultant surveyed as many as 20 Kmart vendors last week and found about a third ceasing shipments, with another third holding back shipments pending developments.
Financial troubles at Kmart started coming to a head following a disappointing holiday shopping season. The board last week announced sweeping management changes. Kmart stock hit a low of $1.49 last week but closed Friday at $1.74.
