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Winndixie cuts 326 to compete with walmart

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http://quote.bloomberg.com/apps/news?pid=10000103&sid=aVIYn9hJSAm0&refer=news_index

Winn-Dixie to Cut 22,000 Positions, Close 326 Stores (Update2)

June 21 (Bloomberg) -- Winn-Dixie Stores Inc., owner of 913 supermarkets in nine states and the Bahamas, will cut 22,000 jobs and close about 326 stores as the company shrinks following its bankruptcy filing in February.

Outlets will be reduced to 587 in five states and the Bahamas and the workforce will be cut by 28 percent, Chief Executive Peter Lynch said in a conference call today. Lynch declined to say how much the company expects to save through the closings and firings.

The moves are part of the grocer's attempt to reduce costs to compete with national, low-cost competitors like Wal-Mart Stores Inc. and eventually repay creditors some or all of the almost $2 billion they were owed when the company filed for bankruptcy.

``I don't see how it can survive,'' said Britt Beemer, chairman of America's Research Group. ``I don't see where Winn- Dixie can carve out a niche'' to compete with Wal-Mart.

Annual revenue after the closures will fall to $7.5 billion from about $10 billion, Lynch said.

Winn-Dixie will cut about 500 jobs at its Jacksonville, Florida, headquarters, Lynch said.

The company will close or sell its six dairy and culture plants, its pizza plant in Montgomery, Alabama, and its beverage products plant in Fitzgerald, Georgia. Winn-Dixie has already been in contact with potential buyers of the assets, Lynch said, characterizing them as both ``big, national companies and small, independent companies.''

Tough News

``It's tough news for a lot of people,'' Lynch said of the job cuts and the closings. ``This is a critical step, a major league step, in stabilizing the company.''

Winn-Dixie will try and differentiate itself by offering better perishables, such as produce, customer service, and convenient shopping locations, Lynch said.

``It's a choice done by necessity and I guess the question is can Winn-Dixie come out clean on the other side,'' Jason Whitmer, an analyst at Cleveland-based FTN Midwest Research, said in a television interview. ``It's fairly early to make that assessment but it's not pretty, let's put it that way.''

The company announced in April 2004 it was closing or selling 156 supermarkets and cutting 10,000 jobs. Winn-Dixie projected $100 million in savings from the moves, which were scheduled to be completed by April of this year.

Lynch replaced Frank Lazaran as chief executive in December after the grocer posted $254 million in losses in four quarters. Winn-Dixie's sales fell in four of the past five years as it lost customers to competitors including Publix Super Markets Inc. and Wal-Mart.

Winn-Dixie, the eighth-largest U.S. food retailer, listed assets of $2.2 billion and debts of $1.9 billion in court papers.

The case is In re Winn-Dixie Stores Inc., No. 05-03817, in the U.S. Bankruptcy Court, Middle District of Florida.


Last Updated: June 21, 2005 15:57 EDT



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