Florida and Southeast Retailers Shuffle the Deck in Unprecedented Wave of Changes

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Florida and Southeast retailers shuffle the deck in unprecedented wave of changes

January 17, 2012

Over the past few weeks, Florida retailers and others doing business in the state have seen an unprecedented shuffling of the deck, which involves five Southeast chains operating in several states with more changes to come. The chains involved are Publix, Aldi, Winn-Dixie, Bi-Lo and Food Lion. For some, the changes are good, but that is not the case for all parties involved.

Winn-Dixie merged with Bi-Lo; Food Lion closed all of its stores in Florida and some in other states; Aldi announced plans to add new stores and a 500,000-square-foot division headquarters in the Sunshine State; and Publix once again denied it has plans to move into North Carolina, despite published reports that the chain is looking at real estate in that market.

Bi-Lo LLC, a South Carolina-based chain owned by Dallas private equity firm Lone Star Funds, and Jacksonville, FL-based Winn-Dixie Stores Inc. have announced plans to merge in a deal worth an estimated $560 million, with Bi-Lo acquiring all outstanding shares of Winn-Dixie stock. At least initially, both store names will continue to be used, and the new company will operate 690 outlets with 63,000 employees in eight Southeast states.

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Almost immediately, a group of Winn-Dixie shareholders filed suit to halt the merger, claiming the $9.50 cash price per share was too low, despite the fact that it represented a 75 percent premium over the 2010 closing price, which was down 24 percent for the year.

Winn-Dixie Chief Executive Officer Peter Lynch, who led the company out of bankruptcy after being appointed in February 2007, vowed that the company will fight the suit. A few days later, he resigned.

In a letter to Winn-Dixie employees, Mr. Lynch wrote, "Having had the privilege to serve as Winn- Dixie's CEO for the last seven years, it is now time for me to seek new challenges." He added that Bi- Lo Chairman Randall Onstead will be appointed CEO and president of the new company, effective when the merger is completed sometime in the next 30-90 days. Mr. Lynch also said that he will remain onboard to assist Mr. Onstead through the transition.

After the merger, Winn-Dixie, which is publicly traded on the Nasdaq stock exchange, will be delisted and the new company will operate as a private concern.

Meanwhile, those who watch the North Carolina real estate market claim Publix Super Markets Inc. of Lakeland, FL, is making another attempt to enter the Charlotte, NC, market, starting with a store near Tega Cay in York County. The company looked into at least 10 sites in North Carolina from 1993-94, but a red-hot real estate market led the grocer to withdraw in mid-1994 and focus on expanding in South Carolina and Georgia, where it opened a distribution center near Atlanta that same year.

Published reports say that Vanessa Santo, a Lakeland realtor, recently requested rezoning of 3.5 acres in York County without naming a client. The Charlotte Business Journal reported that local real estate and government sources confirmed the York County rezoning request is for a Publix store and that the chain is expected to reveal plans for at least one more North Carolina location shortly.

Other locals say that opening one or more North Carolina Publix seems unlikely because the company's nearest distribution center is in Lawrenceville, GA, which is more than 200 miles away.

"Yes, the rumor mill is at it again, but [there is] no new news to report. We are still focusing our efforts on our five states: Florida, Georgia, Alabama, South Carolina and Tennessee. We do have two stores opening in South Carolina that are close to the North Carolina border," Publix Director of Media & Community Relations Maria Brous told The Produce News Jan. 16. "All is the same."

Publix is privately owned and operated by its 142,000 employees, with 1,023 stores in five states. The company's 2009 sales were $24.3 billion.

Publix’s major competitors in North Carolina would be Wal-Mart; Matthews NC-based Harris-Teeter, with 207 stores in eight states; and Salisbury, NC-based Food Lion, which operates about 1,300 supermarkets in 11 states. At least Food Lion did until Jan. 12, when North Carolina-based Delhaize America, Food Lion's parent company and a wholly owned subsidiary of international food retailer the Delhaize Group of Brussels, Belgium, announced that it was closing 113 underperforming stores in six states and exiting the Florida market entirely. The company is also closing a distribution center in

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Clinton, TN, leaving 11 centers throughout its network.

Affected stores are in Florida, Georgia, North and South Carolina, Kentucky and Tennessee areas, where the company has the least store density. All are expected to cease operations within 30 days of Jan. 12.

About 4,900 employees will be laid off. The company will provide severance to eligible employees, while others can apply for other open positions within the company.

"Today's actions will continue to solidify our U.S. operations and enable our company to focus on our successful brand strategy repositioning at Food Lion and the expansion of Bottom Dollar Food in new markets," said CEO Ron Hodge of Delhaize America in a press release. "While these were difficult decisions, given the impact on our associates, customers and communities, we believe these actions will enable us to better serve our customers in our markets with high density, while positioning the company for future growth."

Delhaize America operates more than 1,600 stores in 16 states in the Eastern United States as Bottom Dollar Food, Food Lion, Harveys, Hannaford Supermarkets, Reid's and Sweetbay, with about 107,000 full- and part-time employees. In addition to the closings, the company also announced plans to convert 64 Bloom and Bottom Dollar Food stores in Maryland, North Carolina and Virginia to Food Lion stores. The Delhaize Group operates 3,408 stores in 11 countries on three continents.

While Food Lion is leaving, Aldi Inc., based in Batavia, IL,

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announced plans to increase its presence in Florida. Aldi, which operates 53 stores in Florida, said mid-January that it will build a new 500,000-square-foot division headquarters and distribution center in the Village of Royal Palm Beach, FL. Aldi had not closed on the property as The Produce News went to press, but a company spokesperson said that Aldi is in the process of doing its "due diligence," including surveys, engineering and permitting.

Aldi entered the Florida market in 2008 and has expanded rapidly, with announced plans to add another 60-70 stores in the state in coming years.