Bankrupt supermarket Winn-Dixie Stores Inc has announced plans to cut 22,000 jobs, or 28% of its workforce and reduce the number of its stores from 913 to 587.
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“Creating a smaller, but more profitable store base will best position Winn- Dixie for long-term financial health and a successful future,” said Peter Lynch, president and CEO of Winn-Dixie. “We will be focusing our resources on markets where Winn-Dixie has a strong presence and there are compelling opportunities. This will allow us to build on our strengths and take advantage of the considerable potential we see to improve the shopping experience for our customers. Already, we have made significant strides. The steps announced today will help us to continue our progress as we strive to make Winn-Dixie a stronger company, better able to compete in the marketplace with a strong foundation for the future.”
Winn-Dixie currently operates 901 stores in nine US states and 12 in the Bahamas. These stores are located in 37 Designated Market Areas. Once the plan is implemented, Winn-Dixie will operate approximately 587 stores in 23 DMAs in Florida, Alabama, Louisiana, Georgia, Mississippi, and the Bahamas. Of the 326 stores that the Company will sell or close, 233 stores are in DMAs the company is leaving entirely. The other 93 stores are located in DMAs in which Winn-Dixie will remain, but these particular stores do not meet the company’s financial requirements going forward. Winn-Dixie’s anticipated annual revenue following these store dispositions will be approximately $7.5bn, compared to approximately $10bn today, the company said.
Winn-Dixie is also making changes in its distribution and manufacturing plant operations. Specifically, the company will be exiting 3 of its 10 distribution centres. These facilities are located in Atlanta, Georgia; Charlotte, North Carolina; and Greenville, South Carolina. The company will also close the portion of the Montgomery, Alabama distribution centre that handles dry grocery. The “perishables” portion of the Montgomery distribution centre will remain open, and the company will be expanding the use of the Hammond, Louisiana dry grocery facility to accommodate the dry grocery items now handled in the Montgomery facility.
In addition, Winn-Dixie is marketing for sale its manufacturing plants, including its six dairy and culture plants, its pizza plant in Montgomery, Alabama, and its Chek Beverage/Deep South Products plant in Fitzgerald, Georgia, which produces Chek soda, shelf-stable juices and condiments. If buyers are not found, the company will continue to operate the Chek Beverage plant and the Hammond, Louisiana and Plant City, Florida dairies. The company is also working to find a third party to produce elsewhere the items made at its Astor Products plant in Jacksonville, Florida and the condiments at the Deep South plant. Once third parties are secured, those plants will be closed.
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By GlobalDataThe company, together with its outside advisors, is conducting an active marketing effort to identify potential buyers for the stores, distribution centres and manufacturing plants that it will no longer operate. Stores that cannot be sold will be closed. The company expects to announce the results of this marketing effort within several weeks.
“Our hope is to sell as many of our affected stores, plants and DCs as possible to new owners who will continue to operate them,” stated Lynch. “We are asking potential new owners to offer employment opportunities to our associates.” Winn-Dixie will provide severance and other assistance to each associate who is not offered employment.
The DMAs that Winn-Dixie is exiting are the marketing areas of: Alexandria, Louisiana; Atlanta, Georgia; Augusta, Georgia; Charleston, South Carolina; Charlotte, North Carolina; Chattanooga, Tennessee; Columbia, South Carolina; Columbus-Tupelo, Mississippi; Greensboro-High Point, North Carolina; Greenville-Spartanburg, South Carolina; Huntsville, Alabama; Jackson, Mississippi; Raleigh-Durham, North Carolina; and Savannah, Georgia. (The geographical area included in a DMA often covers more than one state; therefore, the name of the DMA usually reflects more than just the city represented by the DMA name.)
Where practicable, the Company will seek to offer affected associates positions at other Winn-Dixie operations. In addition, the company is reviewing its corporate organization and plans to make reductions in headquarters and support personnel reflecting the smaller store footprint that the company will operate. An announcement regarding a corporate restructuring is expected to be made later this summer.
“We regret the impact these tough decisions will have on many of our Associates, customers and local communities,” Lynch said. “We do not take these decisions lightly and would not be proceeding if these steps were not essential to restore Winn-Dixie’s financial health. We are committed to doing what we can to help minimize the impact, including, wherever possible, attempting to find new owners who will continue to operate the stores, distribution centres and plants that we are exiting. In addition, we will offer assistance to affected Associates to help them through a transition period.”
“The actions announced today represent a very important step in Winn-Dixie’s reorganization,” said chairman Jay Skelton. “By taking these difficult but necessary actions, we intend to put Winn-Dixie in the strongest position for a successful future and to remain a vital, valued partner in the communities we serve.”
