The Penn Traffic Co. has given C&S Wholesale Grocers Inc., of Keene, N.H., responsibility for supplying its 210 supermarkets and independent stores in New York, New Hampshire, Pennsylvania and Vermont.

The move comes after continued financial losses for the Upstate New York regional grocer. Penn Traffic lost $3.4 million in the fiscal second quarter, compared to a loss of $4.9 million in the same quarter a year ago. In the first half of this year the company lost $15.8 million, compared to a loss of $12. 3 million last year.

Penn Traffic's retail food business includes corporate-owned stores with the P&C, Quality Markets and BiLo trade names, and its wholesale food distribution business supplies independently operated supermarkets and other wholesale accounts.

The Syracuse Post-Standard reported last week that the move will end a dozen Penn Traffic corporate jobs and save the company up to $22 million annually.

C&S, a partner with Penn Traffic since early 2007, will now handle purchasing and supplying to Penn Traffic's own P&C Foods supermarket chain and Penn Traffic customers, including grocery, bakery, deli, seafood, dairy, frozen products and more.

"Customers will see very little difference whatsoever," said Chuck Beeler of Eric Mauer Associates. "This is a back office arrangement, the inventory itself will remain the same with the potential down the road to diversify products."

"We believe that this move will free up cash that would otherwise be tied up in inventory and trade receivables, improving our ability to reinvest in stores and enhancing the service and value the company delivers to all customers," said Gregory J. Young, president and chief executive officer of Penn Traffic.

Penn Traffic, which employs more than 7,100 people, operates fewer than 100 supermarkets and supplies supermarket products to another 100 or so grocers.

The new arrangement with C&S, Young said, is designed to stabilize the company and will not affect jobs for warehouse workers or drivers, the company reported Wednesday.

But the management downsizing will occur.

"Some of the essential measures we've taken to stabilize the company, such as this new procurement agreement, have unfortunately required the decision to eliminate positions," said Young.

Penn Traffic owns and operates Quality Markets in Dunkirk (two), Mayville, Silver Creek, Westfield and the Jamestown area.