Two Florida-Based Retailers Headed in Opposite Directions

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Two Florida-based retailers headed in opposite directions

August 4, 2010

Embattled Winn-Dixie Stores Inc., based in Jacksonville, FL, showed that its woes continue, announcing July 27 that it will close another 30 stores and lay off 120 additional corporate and support personnel. Meanwhile, rival Publix Super Markets Inc., based in Lakeland, FL, announced Aug. 1 a 3.4 percent jump in sales for the second quarter of the year and plans to open 34 new stores in 2010.

The tale of the two chains presents a stark contrast in the world of retail haves and have-nots.

Winn-Dixie's problems began years ago as Publix’s ascendancy began. In the Southeast — particularly in Florida — Publix adopted an aggressive expansion policy, targeting existing Winn-Dixie locations and building bigger, fancier stores of its own nearby.

Winn-Dixie countered by remodeling existing stores, razing many and building gleaming new upscale supermarkets in their stead.

But Publix had momentum. As that chain’s number of stores climbed — the current total stands at 1,020 — the Winn-Dixie empire began to crumble. Once the South’s leading retailer, Winn-Dixie had more than 1,000 stores in the early 2000s. However, Publix’s attack crippled Winn-Dixie.

There were other factors involved to be sure, but by 2003 Winn-Dixie had the poorest performing stock of any Fortune 500 company, according to Forbes.com. That year, it closed more than 100 stores and pulled out of the Midwest and former stronghold states of North Carolina and South Carolina. Two years later, Winn-Dixie filed for Chapter 11 bankruptcy protection, closed another 300 stores, and retreated from Tennessee and Virginia. A year later, the chain divested itself of another 47 stores, including a dozen it operated in the Bahamas. The company emerged from Chapter 11 protection in November 2006.

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Winn-Dixie said that the latest round of closures involve underperforming locations that had not gone through a remodeling program that has been part of the chain’s emergence from bankruptcy, and will leave 484 Winn-Dixie locations operating in Florida, Alabama, Louisiana, Georgia and Mississippi. The reorganization will also result in the chain’s operating regions being consolidated to three from four.

Of the stores to be closed, 24 are in Florida (nine in Broward County, seven in central Florida and the rest scattered throughout the state), while Georgia and Mississippi are home to two each, and Alabama and Louisiana will each lose one apiece. Roughly 2,000 store-level positions will be eliminated, though Winn-Dixie said that those workers would have opportunities to apply for other jobs within the company. The changes are expected to be completed by Sept. 22.

"We continue to operate in a particularly difficult economic and retail environment in the Southeast," Peter Lynch, Winn-Dixie’s chairman, chief executive officer and president, said in a July 28 statement. “To respond to these business and economic conditions, we have thoroughly reviewed our retail operations and support structure and have decided to exit certain retail locations and reduce our corporate and field support staffs. The actions we are taking today will enable us to lower our cost structure, improve efficiency and build the right foundation for our business now and in the future.”

Winn-Dixie did not return phone calls to its corporate headquarters or respond to e-mails from The Produce News seeking comment.

While Winn-Dixie will dole out an expected $5 million in severance pay, the company said that as a result of the layoffs, job eliminations and consolidations, it should achieve annualized savings in the range of $12 million to $17 million. Winn-Dixie expects a $35 million to $50 million lease- related charge in its fiscal first quarter that ends Sept. 22 relating to the store closings.

Winn-Dixie was founded in Miami in 1925 and ranked 24th on Supermarket News’ 2010 list of the top 75 performing North American retailers. It is scheduled to report fiscal 2010 results Aug. 31.

Publix, meanwhile, announced Aug. 1 that it had a 3.4 percent jump in sales and a 2.4 percent increase in comparable-store sales for the second quarter of this year. Operating in Florida, Georgia, South Carolina, Tennessee and Alabama, the chain recorded net income of $348.4 million, or 44 cents per share, on revenue of $6.2 billion for the second quarter. That compared with net income of $300.8 million, or 38 cents per share, on revenue of $6 billion for the same period a year prior.

For the first half of 2010, the company reported net income of $712.8 million, or 91 cents per share, on revenue of $12.7 billion, which compared with net income of $622.3 million, or 79 cents per share, on revenue of $12.4 billion for the first-half of 2009.

Even those results were not enough to forestall a drop in Publix’s stock price, though. After the announcement, Publix stock — sold only to current Publix associates and board members — dropped a nickel to $18.45 per share, according to the Aug. 1 statement issued by the retailer.

Publix opened 48 new stores in 2009, remodeled 85 others and bought 49 more from the Albertson’s chain. This year, the company will spend $555 million to open 34 new stores.

Founded in 1930, Publix started aggressive expansion 15 years ago and now ranks 99th on the

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Fortune 500 list and seventh on the Supermarket News’ top 75 list.

Publix is the dominant player in Florida’s retail scene with a 41.6 market share despite stiff competition from Walmart Stores Inc., which has about 25 percent of the market.

Another Florida-based chain, Tampa’s Sweetbay Supermarket, comes in third with 12.5 percent.