Is Winn-Dixie going out of business?

Is Winn-Dixie going out of business?

A press statement came out on August 16, 2023, by the German supermarket chain Aldi, a supermarket business. Aldi plans to buy hundreds of Harveys and Winn-Dixie stores throughout the Southern United States. Aldi would take over the leadership of all Winn-Dixie Supermarket sites in Florida, Alabama, Georgia, Louisiana, and Mississippi. This deal will increase the expanding grocery store’s footprint in the area.

According to the statement, specific locations will be converted into Aldi stores after the acquisition. Others will remain to be operated as Winn-Dixie and Harvey Supermarket grocery stores. The agreement highlights the supermarket sector’s flexibility. Thus, it has generally avoided the macroeconomic pressures that have affected other industries.

Winn-Dixie is not going out of business but will be acquired by its owner, Southeastern Grocers. In this article, let’s take a closer look at the American grocery business Winn Dixie.

A quick recap of Winn-Dixie

Winn-Dixie Stores, Inc. is a Florida-based American supermarket business. In Florida, Alabama, Louisiana, Georgia, and Mississippi, Winn-Dixie operates more than 546 locations. The company was founded in 1925 and has been known by its current name since 1955.

Before declaring Chapter 11 bankruptcy in 2005, Winn-Dixie was a member of the S&P 500. It had been trading on the New York Stock Exchange since February 18, 1952. It announced the sale or closure of 326 locations on June 21, 2005. Due to the bankruptcy, the chain has fewer locations than it did in the late 1960s.

On February 28, 2006, the business stated that 35 more stores would be sold or closed. On March 31, 2006, it was revealed that the chain would sell its 12 sites in the Bahamas, which had been run by a wholly owned subsidiary, W-D Limited.

An announcement to buy Winn-Dixie was made on December 19, 2011, by another Southeastern supermarket company, BI-LO. On March 9, 2012, Winn-Dixie was delisted from the NASDAQ and converted into a wholly-owned subsidiary of Southeastern Grocers.

After 67 years of Davis family ownership, Winn-Dixie was acquired by Bi-Lo Holdings on March 9, 2012. Thus marking the end of that ownership. The combined company, which employs over 63,000 team members, has 750 outlets in seven states in the Southeast. The combined business is headquartered in Jacksonville at Winn-Dixie’s corporate offices.

All remaining Sweetbay Supermarket sites underwent a Winn-Dixie rebranding on October 8, 2013. Southeastern Grocers replaced Bi-Lo Holdings as the company name in 2015.

An announcement was made in July 2017 by Southeastern Grocers that Seven Winn-Dixie stores would be converted. This was made to launch Harvey’s brand in Central and West Florida. Southeastern also stated in October 2017 that three more West Florida Winn-Dixie stores would be changed to the Harveys brand.

On March 15, 2018, Southeastern Grocers announced that they would submit a reorganization plan under Chapter 11. The corporation estimates that the restructuring would result in a debt reduction of more than $500 million. From 704 sites, Southeastern Grocers emerged from bankruptcy with 575 stores spread over seven states in May 2018. Additionally, they disclosed plans to renovate 100 locations in 2018.

Southeastern Grocers said in February 2019 that it would be closing 22 stores. Seven Winn-Dixie locations were among those to be completed during this round.

Southeastern Grocers and Harvey’s agreed to a deal on August 16, 2023. The agreement was to sell 400 Winn-Dixie and Harvey’s supermarkets to the German retailer Aldi. The 28 Fresco y Mas stores and four independent pharmacies, which Fresco Retail Group, LLC will run, were not included in the deal with Aldi.

The parent company of Winn-Dixie is closing stores and selling them to Aldi

One of the nation’s fastest-growing supermarkets will acquire the Winn-Dixie and Harvey’s Supermarket brands. It is part of a transaction that would see the Jacksonville-based business sell off its assets.

German discount grocer Aldi will purchase about 400 Winn-Dixie and Harvey’s Supermarket outlets in an all-cash deal. The outlets are spread throughout Alabama, Florida, Georgia, Louisiana, and Mississippi. The business announced this on August 16, 2023.

The CEO of Aldi, Jason Hart, stated: “Like Aldi, Winn-Dixie, and Harvey’s, supermarkets have rich histories. They also have many devoted clients in the Southeast. We look eagerly forward to serving them in the future.”

Aldi plans to run most of the stores it purchases under its present brand while converting some of them to its own.

The needs for real estate are pretty different between Aldi and the Southeastern Grocer banners. Aldi typically has a footprint of about 20,000 square feet, while the average Winn-Dixie is just under 50,000 square feet. Given that Harvey’s stores range from 18,000 to 35,000 square feet, Aldi would be a better match for some of them.

The Fresco Retail Group will purchase the Fresco y Mas trademark from Southeastern Grocers. The 28 stores and four pharmacies will continue to be run by the same investor group under their current brand.

What the deal implies for Southeastern Grocers’ Jacksonville headquarters is still being determined. In Jacksonville, the company operates a warehouse and several dozen storefronts. Also, the business employs 2,100 employees.

Southeastern Grocers stated it could not ” speculate on any prospective plans or another company’s plans.” But a representative said that no changes would happen soon.

Aldi has expressed their respect for SEG’s success and the leadership team. They expect minor changes at the Store Support Center in Jacksonville once the sale is complete. This is according to Meredith Hurley, senior director of communications and community.

What is Aldi’s plan?

For the previous three years, Aldi has had the nation’s fastest rate of supermarket growth. Aldi claimed that since the middle of the 1990s, it has invested $2.5 billion in the area. By the end of the year, it hopes to have 2,400 outlets by adding 120 new stores.

Aldi has witnessed an increase in customers in Florida despite Lakeland-based Publix Super Markets Inc. continuing to hold the top position. According to research from the real estate company JLL, Aldi’s yearly visits in 2022 were fourth in Florida, but they increased by 11% year over year.

Subject to approval from regulators and other usual closing conditions, the transaction will probably close in the first half of 2024.

Southeastern Grocers CEO Anthony Hucker stated in a separate statement:

“Our great transformative journey provided a unique opportunity with leading partners. They share our goals and a similar commitment to creating value for their clients.” ” We are confident that these next steps will result in an outstanding customer experience and fresh opportunities for our employees. Also, it will enhance value for our shareholders. We will remain focused on providing superior quality, service, and value. So, our clients and surrounding areas have come to expect more from us as the sales processes move forward.

Since the 1940s, Winn-Dixie has played a role in Jacksonville’s commercial environment. This includes acting as the Jaguars’ official grocer. Over the years, the business has undergone many significant changes.

Competing with Publix!

Phil Lempert is the publisher of the trade newsletter Supermarket Guru. According to him, Aldi is more than just purchasing Winn-Dixie’s prime retail locations in areas like Florida. But it also buys from its devoted and value-driven customer base.

Publix, which has 857 sites throughout Florida, continues to be the leader among supermarkets in the Sunshine State. It also has a devoted following of customers.

However, sometimes, consumers want to choose between only a few brands of essentials, like olive oils, according to Lampert. In one of the nation’s fastest-growing regions, Aldi is a preferred option for younger buyers. It’s because of its blend of quality, curation, and pricing. And when these values are combined with the current Winn-Dixie stores, “that’s going to make it a hard competitor for Publix,” Lempert predicted.

The merger will allow the German retailer Aldi to test various shop models, as it doesn’t typically acquire businesses.

Conclusion

Aldi has yet to state how many Harveys and Winn-Dixie locations it intends to convert. It also needs to be determined how much the transaction will cost. Yet Southeastern Grocers, which has struggled for years to stay afloat, would be relieved. This is according to Neil Saunders, managing director of GlobalData.

According to Saunders, “Under Aldi’s stewardship, the company will have exposure to much more money and an effective and productive supply chain. This will help reduce costs.” According to the agreement, Aldi will pay cash in full for the capital stock of the Florida-based business.

While Winn-Dixie stores will continue to run under the Aldi brand, some might switch to the Aldi operating system. Winn-Dixie and Aldi have not yet made any statements on staffing changes.

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