Ian McLeod out as Southeastern Grocers CEO

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Re: Ian McLeod out as Southeastern Grocers CEO

Post by pseudo3d »

wnetmacman wrote:
pseudo3d wrote:They never can take on Publix if they don't try. Walmart is a big competitor too, but the companies that have faced it head-on, like Publix or Kroger, succeed. If all you can do is try to undercut Walmart, you'll lose like Kmart did preceding their 2002 bankruptcy.

Obviously Winn-Dixie becoming the empire it once was is unfeasible, but they could have stuck to their guns with their nicer remodels and improved operations as the 2005 bankruptcy becomes more of a distant memory. Effectively trimming their store base and remodeling the remaining stores would have at least made Winn-Dixie a more viable acquisition target.

Trying to remodel stores, especially as an attempt to make the store not look like it was built 30 years ago is going to fail if you don't have properly operational stores.
The problem, at least as I've seen it, is that neither SEG or Lone Star Funds seem to want to invest in anything other than stores getting the FyM or Harvey's remodels. And those are only a few at a time; never more than 10. It's an easy, cheap remodel, but as you say, it isn't fixing the underlying management or staff issues.

SEG doesn't have the funds to battle Publix for these reasons. They can't fix a leaky cooler in one store, much less take on the leader in their home state. That's not even to think of Walmart. One of the stores that recently closed in Lafayette, LA held a big shindig on April 8, handing out dozens of gift cards, shopping bags, and demos, among other things. Today, June 27, that store is closed. It was too little, too late. That store was at one time the only supermarket in this part of town. When competition came, especially the Walmart that opened on April 5, they didn't meet it with an attempt, it was met with failure.
Maybe if they hadn't wasted time with FyM, Harveys, and others then maybe they would've had funds. Clearly the company HAD money at some point, after all, Lone Star Funds bought it and combined it with BI-LO, so where did all that go? Did they just piss it away on corporate bonuses like Lampert did?
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Re: Ian McLeod out as Southeastern Grocers CEO

Post by Knight »

pseudo3d wrote: Trying to remodel stores, especially as an attempt to make the store not look like it was built 30 years ago is going to fail if you don't have properly operational stores.
Excluding the Super BI-LO stores that were constructed in 2007, many BI-LO stores are at least 15 years old. Most stores are between 20 to 30 years old.
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Re: Ian McLeod out as Southeastern Grocers CEO

Post by wnetmacman »

pseudo3d wrote:Maybe if they hadn't wasted time with FyM, Harveys, and others then maybe they would've had funds. Clearly the company HAD money at some point, after all, Lone Star Funds bought it and combined it with BI-LO, so where did all that go? Did they just piss it away on corporate bonuses like Lampert did?
It seems that CapEx is being strategically used on stores where they think Harvey's or FyM have a chance. It isn't being used to modernize WD, Bi-Lo or anything else, and older stores are being ignored. Remember that WD has only built 3 or 4 new stores since 1997-98. That puts almost the entire store base at 20+ years old, and that's an eternity, especially considering that most of those haven't been remodeled ever during that time.
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Re: Ian McLeod out as Southeastern Grocers CEO

Post by pseudo3d »

wnetmacman wrote:
pseudo3d wrote:Maybe if they hadn't wasted time with FyM, Harveys, and others then maybe they would've had funds. Clearly the company HAD money at some point, after all, Lone Star Funds bought it and combined it with BI-LO, so where did all that go? Did they just piss it away on corporate bonuses like Lampert did?
It seems that CapEx is being strategically used on stores where they think Harvey's or FyM have a chance. It isn't being used to modernize WD, Bi-Lo or anything else, and older stores are being ignored. Remember that WD has only built 3 or 4 new stores since 1997-98. That puts almost the entire store base at 20+ years old, and that's an eternity, especially considering that most of those haven't been remodeled ever during that time.
Harveys and FyM got "repaint" remodels and I doubt actual capex. More likely we'll see Harveys stores close their service departments if not entirely. I suppose I am missing the fact that maybe that from day one of BI-LO buying Winn-Dixie drained BI-LO of funds and saddled Winn-Dixie with a chain that couldn't do much itself, with the situation exacerbated by purchasing Sweetbay, Harveys, and Reid's for $250 million. Like with Jitney Jungle, converting Sweetbay seemed to be an attempt to bolster a flagging market and getting disappointing results.
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Re: Ian McLeod out as Southeastern Grocers CEO

Post by wnetmacman »

pseudo3d wrote:Harveys and FyM got "repaint" remodels and I doubt actual capex. More likely we'll see Harveys stores close their service departments if not entirely.
Any investment in a property, regardless of it being a repaint remodel or gutting the store down to the studs is a capital expenditure. Those repaint remodels change the character of the store, regardless of whether for the better or not. In SEG's case, I suspect it will eventually result in not.
pseudo3d wrote:I suppose I am missing the fact that maybe that from day one of BI-LO buying Winn-Dixie drained BI-LO of funds and saddled Winn-Dixie with a chain that couldn't do much itself, with the situation exacerbated by purchasing Sweetbay, Harveys, and Reid's for $250 million. Like with Jitney Jungle, converting Sweetbay seemed to be an attempt to bolster a flagging market and getting disappointing results.
WD's sale to Bi-Lo bolstered both companies, but when you buy a 10 foot board to fix a 12 foot hole, you can't stop the ship from sinking.

Sweetbay was regarded as a failure, and it was a conversion of Kash 'n' Karry, which was another failure. Harveys, similar to its parent, has been slowly dying for many years. I don't know much about Reid's, but I suspect it's in good company.

Jitney Jungle/Delchamps was a slightly different story. The two companies were fairly successful for a long time, though they had been slipping as Walmart intruded on their respective territories. A new store format (Premier) didn't have the time to get enough stores going to be successful. When WD introduced its mediocrity to the stores, it was indeed a recipe for failure.

SEG may find a way to survive McLeod leaving, but as of yet, they don't look good, and the vultures are starting to circle.
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Re: Ian McLeod out as Southeastern Grocers CEO

Post by pseudo3d »

wnetmacman wrote:
pseudo3d wrote:Harveys and FyM got "repaint" remodels and I doubt actual capex. More likely we'll see Harveys stores close their service departments if not entirely.
Any investment in a property, regardless of it being a repaint remodel or gutting the store down to the studs is a capital expenditure. Those repaint remodels change the character of the store, regardless of whether for the better or not. In SEG's case, I suspect it will eventually result in not.
pseudo3d wrote:I suppose I am missing the fact that maybe that from day one of BI-LO buying Winn-Dixie drained BI-LO of funds and saddled Winn-Dixie with a chain that couldn't do much itself, with the situation exacerbated by purchasing Sweetbay, Harveys, and Reid's for $250 million. Like with Jitney Jungle, converting Sweetbay seemed to be an attempt to bolster a flagging market and getting disappointing results.
WD's sale to Bi-Lo bolstered both companies, but when you buy a 10 foot board to fix a 12 foot hole, you can't stop the ship from sinking.

Sweetbay was regarded as a failure, and it was a conversion of Kash 'n' Karry, which was another failure. Harveys, similar to its parent, has been slowly dying for many years. I don't know much about Reid's, but I suspect it's in good company.

Jitney Jungle/Delchamps was a slightly different story. The two companies were fairly successful for a long time, though they had been slipping as Walmart intruded on their respective territories. A new store format (Premier) didn't have the time to get enough stores going to be successful. When WD introduced its mediocrity to the stores, it was indeed a recipe for failure.

SEG may find a way to survive McLeod leaving, but as of yet, they don't look good, and the vultures are starting to circle.
I suspect Kash 'n' Karry may have been the victim of too many new corporate owners (in the 1980s it was owned by Lucky, then became independent, then filed for bankruptcy, then filed for an IPO, then was bought by Delhaize) and Sweetbay was created to try to disassociate from that (with disappointing results). As for Jitney and Delchamps, at least Delchamps' claim was that it had low prices and from articles when Delchamps was at its prime, not much more than that, so when Walmart began cutting into the "low prices" claim, Delchamps suffered (note that it was only two years between the merger and Jitney filing for bankruptcy protection), and of course, Winn-Dixie was suffering the same problems Delchamps was. The similarities do seem apparent though:

1) a company not doing so well itself in a market where Winn-Dixie was weak in
2) Winn-Dixie buys stores and suddenly has stores in the market
3) botched conversion just ends up being mediocre and doesn't save them
4) hurts Winn-Dixie financially
5) stores end up closing anyway
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Re: Ian McLeod out as Southeastern Grocers CEO

Post by klkla »

They are converting more stores to the Harvey's banner so maybe they are seeing better results than we expect?

http://www.supermarketnews.com/marketin ... me-harveys

An interesting quote from the article:

"For at least some of the stores, the move to the Harveys brand will introduce the fourth banner the same locations have operated under since 2004. The Tampa store, for example, was Kash & Karry banner operated by Delhaize, until Delhaize refocused it for its Sweetbay brand. Southeastern acquired Sweetbay in 2003 — the same deal in which it also bought Harveys — and rebranded those stores under Winn-Dixie."
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Re: Ian McLeod out as Southeastern Grocers CEO

Post by pseudo3d »

klkla wrote:They are converting more stores to the Harvey's banner so maybe they are seeing better results than we expect?

http://www.supermarketnews.com/marketin ... me-harveys

An interesting quote from the article:

"For at least some of the stores, the move to the Harveys brand will introduce the fourth banner the same locations have operated under since 2004. The Tampa store, for example, was Kash & Karry banner operated by Delhaize, until Delhaize refocused it for its Sweetbay brand. Southeastern acquired Sweetbay in 2003 — the same deal in which it also bought Harveys — and rebranded those stores under Winn-Dixie."
No, because Harveys stores downscale the merchandise mix which makes them cheaper to operate (no doubt the perishable departments downscaled as well).
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Re: Ian McLeod out as Southeastern Grocers CEO

Post by pseudo3d »

McLeod's successor, at least in the interim, is basically McLeod's protégé with plans to continue what McLeod was doing, including more Harveys conversions.
Hucker, a transplant from Wales, comes to Southeastern Grocers with 18 years’ experience in the business. He was formerly COO of Midwest supermarket chain Schnucks and played a major role on the start-up team for Aldi in the U.K. He also did a stint in Walmart’s strategy and business development division. Hucker said he was eager to join the Southeastern Grocers team because he was ready to graduate to a bigger company. The opportunity to live in Florida didn’t hurt, either.
This is not looking good. Hucker is basically a discount McLeod with the same sort of disconnection McLeod had with what he was doing but without the vision or experience. The article mentions how Hucker wants to bring Winn-Dixie "into the future" but with Winn-Dixie really going nowhere as a company, I don't see that happening. McLeod's end goal of Coles was for it to build back volume and become a competitive grocer again, which it did. Meanwhile, Winn-Dixie continues to get crushed by Publix and can't even hold ground against Albertsons in places like Baton Rouge and McLeod can't even get the volume Winn-Dixie needs. (I don't know enough about southeastern markets to know if Kroger competes against BI-LO)
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