Analyst: SEG will not be around in 5 years

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Re: Analyst: SEG will not be around in 5 years

Post by Knight »

In regards to launching pharmacy operations, Winn-Dixie opened its first pharmacy in 1984 in Valdosta, Georgia. The store that had the pharmacy was also the first WInn-Dixie Marketplace.

Publix launched its pharmacy operations in October 1986 with Publix #301, Jamestown Place, 951 North State Road 434, Altamonte Springs, Florida 32714-7026.
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Re: Analyst: SEG will not be around in 5 years

Post by pseudo3d »

Knight wrote: November 18th, 2017, 9:21 pm In regards to launching pharmacy operations, Winn-Dixie opened its first pharmacy in 1984 in Valdosta, Georgia. The store that had the pharmacy was also the first WInn-Dixie Marketplace.

Publix launched its pharmacy operations in October 1986 with Publix #301, Jamestown Place, 951 North State Road 434, Altamonte Springs, Florida 32714-7026.
It doesn't matter when each chain launched their respective pharmacy departments, it is what they did with it. By 1991, Publix was probably rolling out pharmacies chainwide and by 1996 that was standard, whereas Winn-Dixie definitely did NOT have pharmacies in many of its stores by 1989 and not by 1994 either. If Winn-Dixie had mobilized faster in the late 1980s and early 1990s, they probably wouldn't have had much trouble later. This article talks about how Winn-Dixie tried to compete with Publix with "Food Pavilion" but as we all know they never really expanded on that much and they lost the supermarket battle when Publix not only caught up with them but rendered them irrelevant in the course of less than a decade, and it kept getting worse--while Publix was modernizing and growing outside of Florida (the first non-Florida Publix only opened in 1991), Winn-Dixie was getting lost, acquiring Thriftway and a bunch of old Delchamps/Jitney Jungle stores.

If Winn-Dixie had even taken a different turn in the early 1990s by not buying Delchamp/Jitney Jungle or Thriftway, cutting off Texas Division because it would involve a tremendous amount of investment that Winn-Dixie either didn't care to do or couldn't afford, and then focusing all of its energy in its base, then perhaps the company would look very different right now.
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Re: Analyst: SEG will not be around in 5 years

Post by buckguy »

I think it's both difficult to imagine an alternate past or a positive future for WD, in particular, or SEG, in general. The current chain really has no niche. W/D did make some efforts at growing organically but they often didn't work out--Nashville was a good example. It was/is a growing metro area where a lot of the migrants came from other parts of the South. W/D should have benefited from the goodwill that might have come from that but they didn't, even though they did not have a lot of local competition (HG Hill in retreat and Kroger with its typical mediocrity). Instead, they went into an odd collection of locations and were gone by the late 80s.

W/D was always a low rent, low cost operation and served as a piggy bank for the Davis family. The move into marketplace stores was an error because it went against their strengths and was exactly the kind of store they weren't equipped to operate. Food Lion competed successfully with them by basically using the old W/D model and then the sheer force of Walmart made it impossible for them to get any headway. Yes, Thriftway was a dumb idea (and, no, Thriftway was never in Indiana), but they did some other dumb ideas on their own like expanding toward DC, a market where they could never succeed.

My experience with Bi-Lo was limited but they seemed to be able to competently run stores, even if they were sometimes small and dated. W/D, on the other had, seemed to go for unattractive, poorly stocked stores, with weak perishables.
Large retail firms seem able to limp along for many years despite obvious problems--KMart has been closing stores since before their fateful merger with Sears. A&P Limped along for decades. Perhaps it's the cashflow, the realestate (even if its just leases) or the ability to generate receivables, but somehow big chains struggle for years. I've not seen one in as bad a shape as SEG successfully get "rescued" and I can't imagine what the endgame is at this point---where can they compete successfully? and how do you turn around an organization that has had little stability or competence in many years? Actually, you don't. Perhaps Lone Star can find someway to pull cash from all of this--some favorable leases to sell, probably some kind of tax break they can amortize over a period of years when the whole things goes bust. But the bust is going to happen. There might have been a time when some regionals could buy at least some of the carcass here, but that yime is longgone.
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Re: Analyst: SEG will not be around in 5 years

Post by pseudo3d »

buckguy wrote: November 19th, 2017, 7:13 am I think it's both difficult to imagine an alternate past or a positive future for WD, in particular, or SEG, in general. The current chain really has no niche. W/D did make some efforts at growing organically but they often didn't work out--Nashville was a good example. It was/is a growing metro area where a lot of the migrants came from other parts of the South. W/D should have benefited from the goodwill that might have come from that but they didn't, even though they did not have a lot of local competition (HG Hill in retreat and Kroger with its typical mediocrity). Instead, they went into an odd collection of locations and were gone by the late 80s.

W/D was always a low rent, low cost operation and served as a piggy bank for the Davis family. The move into marketplace stores was an error because it went against their strengths and was exactly the kind of store they weren't equipped to operate. Food Lion competed successfully with them by basically using the old W/D model and then the sheer force of Walmart made it impossible for them to get any headway. Yes, Thriftway was a dumb idea (and, no, Thriftway was never in Indiana), but they did some other dumb ideas on their own like expanding toward DC, a market where they could never succeed.
If Winn-Dixie hadn't done Marketplace at all, then they would've gotten absolutely steamrolled by Walmart in the late 1990s and early 2000s. Delchamps and Jitney Jungle were a similar story, both of them fairly no-frills stores with low prices and getting knocked out of commission (Winn-Dixie bought a number of their stores but of course they still closed anyway). Food Lion isn't exactly a success story, either. Even after they withdrew from Texas and Oklahoma, they had to face competition back on the East Coast, and then had to do "market renewals" in their existing markets by introducing two new banners, which were both ultimately failures. Plus, if you notice, with a few odd exceptions in select markets, it was almost always the Food Lion stores to get divested following the Ahold/Delhaize merger.

I wouldn't say Marketplace went against Winn-Dixie's strengths, Kroger faced a similar problem in the 1970s when it realized that their average store size was tiny compared to their competitors (an average store size of 16,000 square feet in 1970, tiny even by 1970 standards) and fought back with the Superstore design. They aggressively replaced or expanded their store base with the new design (at a minimum 28k square feet) and upgraded that to Greenhouse later on, pulled out of markets in the 1980s and early 1990s that obviously weren't going to cut it, and made strategic acquisitions that would put it in #1 or a close #2 in the market area. The result was by the early 2010s the largest conventional supermarket chain with a huge number of stable markets and acquisitions that didn't immediately burn down when they bought them (in contrast to Safeway, Albertsons, A&P, etc.).

In contrast, Winn-Dixie did not nearly put in the efforts to upgrade the chain to universal Marketplace standards, did not pull out of loser markets where they weren't going to cut it (like Texas), did not invest in the markets where it was stronger in (the number of new-build stores in Louisiana in the 1990s is shockingly low) and didn't make strategic acquisitions that would enable it to expand and grow. The result was by the early 2010s Winn-Dixie was a laughable has-been with an aging store base that closed far more stores than it opened.

I think that SEG made too many wrong turns in the last five years by not expanding on any of the nicer Winn-Dixie prototypes and instead focused on cheap conversions, and not adopting the "best practices" to create a cohesive chain that could fight against Kroger and Publix.
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Re: Analyst: SEG will not be around in 5 years

Post by architect »

Another article which adds fuel to the fire, though I'm taking it with a grain of salt as it seems to be mostly speculation:

http://www.sunherald.com/news/business/ ... 68218.html
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Re: Analyst: SEG will not be around in 5 years

Post by pseudo3d »

architect wrote: November 19th, 2017, 7:35 pm Another article which adds fuel to the fire, though I'm taking it with a grain of salt as it seems to be mostly speculation:

http://www.sunherald.com/news/business/ ... 68218.html
Bankruptcy is questionable but if Lone Star Funds have cut them off, it's a bad sign in their confidence in the company. If not a total collapse, they need to pare down their assets before store conditions start deteriorating and shipments get cut off. Not reopening the Louisiana stores after the 2016 floods in Louisiana was a bad sign in terms of their continued support of the Louisiana market (by contrast, Albertsons reopened Kingwood even if the mismatched salvaged Albertsons checkstands indicate that perhaps some corners may have been cut).
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Re: Analyst: SEG will not be around in 5 years

Post by klkla »

architect wrote: November 19th, 2017, 7:35 pm Another article which adds fuel to the fire, though I'm taking it with a grain of salt as it seems to be mostly speculation:

http://www.sunherald.com/news/business/ ... 68218.html
There are a lot of interesting takeaways from the article:

"Bi-Lo bonds due next year trade at 32 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. "

Ouch! That is a red flag if ever I have seen one.

"While the borrowing may benefit buyout firms, it hobbles their companies. As of March, Bi-Lo’s debt was almost six times higher than its Ebtida, or earnings before taxes, interest, depreciation and amortization, according to Moody’s Investors Service. The average of a junk-rated company is about five times Ebitda, according to S&P Global. Better-performing grocery chains such as Kroger Co. have ratios closer to three times."
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Re: Analyst: SEG will not be around in 5 years

Post by pseudo3d »

This is why I fear that McLeod's replacement is just going to ignore the problems of SEG and carry on a watered-down version of his predecessor's legacy by continuing conversions, instead of doing the hard steps by cutting off markets that aren't working. He may end up going down as the worst Winn-Dixie lead since Frank Lazaran.*

*As an aside, I don't think Lazaran's ever been discussed here, but his resume looks like a Who's Who of failing retailers. He was in charge of Randalls from 1999 to 2002 under Safeway (where the market share plummeted, though it's questionable how much that was Burd's fault, and his successor never opened any new stores), Winn-Dixie from 2003 to 2004 (he was fired after Winn-Dixie was dropped from S&P500, taking $7 million on his way out), and then Marsh after it was bought by Sun Capital in 2006 to 2011 (and we all know how THAT ended).
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Re: Analyst: SEG will not be around in 5 years

Post by klkla »

pseudo3d wrote: November 19th, 2017, 8:21 pm This is why I fear that McLeod's replacement is just going to ignore the problems of SEG
The problem is that SEG's real problem isn't their operations. The real problem is that they been saddled with debt and have no way to pay it back.

Their operations are mediocre at best but not the reason why they might have to file BK.
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Re: Analyst: SEG will not be around in 5 years

Post by wnetmacman »

klkla wrote: November 20th, 2017, 3:21 pmThe problem is that SEG's real problem isn't their operations. The real problem is that they been saddled with debt and have no way to pay it back.

Their operations are mediocre at best but not the reason why they might have to file BK.
On the contrary; if the operations do well enough, then sales grow and they could pay off the debt. Unless the operations improve, they'll never get it manageable.
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