retail news in context, analysis with attitude

Southeastern Grocers, owners of Bi-Lo and Winn-Dixie, yesterday filled for Chapter 11 bankruptcy protection.

The Wall Street Journal reports that the reorganization move “will hand ownership to its creditors and reduce its debt by about $500 million.”

According to the story, the company “plans to keep more than 580 of its grocery stores open, while closing at least 85 and selling more than 30.

The Journal writes that “like its peers, Southeastern has been battered by threats ranging from low-cost competitors such as Aldi to price cuts at Whole Foods after that chain was sold to Amazon.com Inc. The company has already closed dozens of Bi-Lo stores in the past 18 months.”

Last year, with sales of close to $9.9 billion, the company lost $139 million. The Journal notes that “both Bi-Lo and Winn-Dixie have been through bankruptcy before. Private-equity firm Lone Star Funds bought Bi-Lo from Ahold NV in 2005 and kept control of the company after it went through bankruptcy in 2009. Winn-Dixie Stores Inc., which filed for chapter 11 in 2005 and emerged in 2006, was sold to Bi-Lo in 2012.”
KC's View:
Getting rid of debt is a good thing. Seems to me, though, that it is even more important for Bi-Lo and Winn-Dixie to figure out how to make their stores more compelling and differentiated in a competitive environment that is only going to get more heated.