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 pseudo3d »

klkla wrote: November 20th, 2017, 3:21 pm
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.
SEG is repeating a lot of the same Winn-Dixie problems that landed them into bankruptcy in 2005. The first is converting underperforming stores to new banners like Harveys and Fresco y Más, just like how it was converting stores to SaveRite, which sound eerily similar to their new banners. But most of the SaveRite stores closed anyway. The second problem is "dead markets walking". We've discussed that the Texas Division of Winn-Dixie was a failure, and Louisiana is quickly looking that way. Outside of New Orleans, the story looks grim with the west-of-the-Mississippi stores dying a slow death, and even in Baton Rouge the story isn't much brighter. Albertsons already had far more stores than Winn-Dixie did, and the failure to reopen the flooded stores speaks volumes. Inside of New Orleans, it's a little less grim as they DID reopen a tornado-damaged store this year AND a new-build store did open in 2013. I can't find recent market share information, but in 2000, Winn-Dixie commanded first place in market share over A&P and Albertsons while in 2006 they had 20%, significantly less than Walmart's 38%, and not much more than A&P's 19%. I would guess that by now they have fallen into third place as Rouses has absorbed A&P's market share plus some.

I would like to see SEG survive in some form, but their current course is a pathway to oblivion.
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Re: Analyst: SEG will not be around in 5 years

Post by klkla »

I don't disagree with the points that are being made about their operations. They are mediocre. But at this point it doesn't appear there is a whole lot they can do to improve operations because of the debt issue, especially the debt that expires next year.

They either have to 1) come up with the money to pay the bondholders, 2) renegotiate with the bondholders or 3) file bankruptcy.
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Re: Analyst: SEG will not be around in 5 years

Post by pseudo3d »

klkla wrote: November 20th, 2017, 8:16 pm I don't disagree with the points that are being made about their operations. They are mediocre. But at this point it doesn't appear there is a whole lot they can do to improve operations because of the debt issue, especially the debt that expires next year.

They either have to 1) come up with the money to pay the bondholders, 2) renegotiate with the bondholders or 3) file bankruptcy.
They don't have a lot of assets to push around, something that Sears has relied on, and Albertsons still has. SEG already contracted out their DCs to C&S and sold their manufacturing plants. That's why they need to pare down their store base and sell off "fringe" markets, and then re-invest that in their core markets with solid (if unpretentious) stores. If they at least have a plan that works, then they convince bondholders that they can pull through and it won't waste away to nothing. Or they could give up and break apart. I would rather see the former.
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Re: Analyst: SEG will not be around in 5 years

Post by jguzzardo1 »

I worked at one of the biggest Kroger location in the Atlanta market in 2016. We had execs from Cincinnati come through all the time and, as an hourly, you did hear things. One of things which was made clear was that Kroger was NOT buying Winn Dixie or SEG for one reason - debt load was FAR too high. SEG is very badly leveraged, and LSF is one of the reasons its that way. That being said, SEG has two things going for it; a great distribution network and favorable leases at many of its current WInn Dixie locations. Remember, SEG sold the Bi-Lo holdings which were underperforming to Food City, which meant Bi-Lo left NW Georgia, Chattanooga and NE Alabama.

This is just theory about SEG: Winn Dixie will either be completely converted over to Harveys as part of a massive rebranding and spun off or Bi Lo will be spun off if SEG is serious about survival (I have zero reason to believe they are right now). Kroger would not be able to go toe-to-toe in Florida right now because so many midwesterners have a bad taste in their mouth from Kroger years ago - Atlanta Kroger is a COMPLETELY difference animal from the rest of the country, mostly because ATL is a hyper-competitive grocery market. My money is on Royal Delhaize buying SEG and rebranding Winn Dixie in Harveys OR (and this IS a reach), rebranding the stores into an entirely new concept. Now, that being said, there is a nasty little rumor going around the Royal Delhaize is eyeing Kroger for a mega-merger, but something tells me RD is waiting for SEG to go into BK court and snatch them up at a bargain price from LSF.

And you can forget SEG being bought by Ingles - that's a company which has a different set of issues, and Ingles has no desire to inherit those of SEG.
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Re: Analyst: SEG will not be around in 5 years

Post by pseudo3d »

jguzzardo1 wrote: January 5th, 2018, 9:59 pm I worked at one of the biggest Kroger location in the Atlanta market in 2016. We had execs from Cincinnati come through all the time and, as an hourly, you did hear things. One of things which was made clear was that Kroger was NOT buying Winn Dixie or SEG for one reason - debt load was FAR too high. SEG is very badly leveraged, and LSF is one of the reasons its that way. That being said, SEG has two things going for it; a great distribution network and favorable leases at many of its current WInn Dixie locations. Remember, SEG sold the Bi-Lo holdings which were underperforming to Food City, which meant Bi-Lo left NW Georgia, Chattanooga and NE Alabama.

This is just theory about SEG: Winn Dixie will either be completely converted over to Harveys as part of a massive rebranding and spun off or Bi Lo will be spun off if SEG is serious about survival (I have zero reason to believe they are right now). Kroger would not be able to go toe-to-toe in Florida right now because so many midwesterners have a bad taste in their mouth from Kroger years ago - Atlanta Kroger is a COMPLETELY difference animal from the rest of the country, mostly because ATL is a hyper-competitive grocery market. My money is on Royal Delhaize buying SEG and rebranding Winn Dixie in Harveys OR (and this IS a reach), rebranding the stores into an entirely new concept. Now, that being said, there is a nasty little rumor going around the Royal Delhaize is eyeing Kroger for a mega-merger, but something tells me RD is waiting for SEG to go into BK court and snatch them up at a bargain price from LSF.

And you can forget SEG being bought by Ingles - that's a company which has a different set of issues, and Ingles has no desire to inherit those of SEG.
Why would Ahold buy SEG? They were the ones to offload BI-LO to LSF in the first place.
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Re: Analyst: SEG will not be around in 5 years

Post by wnetmacman »

pseudo3d wrote: January 6th, 2018, 6:21 am Why would Ahold buy SEG? They were the ones to offload BI-LO to LSF in the first place.
Stranger things have indeed happened. Like Albertsons breaking up, only to buy itself back at bargain basement pricing and then buying up Safeway. I'm not writing it off, because anything is possible. Both Albertsons and Kroger have bought themselves back into places they've left or sold off, and done so recently.
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Re: Analyst: SEG will not be around in 5 years

Post by Knight »

jguzzardo1 wrote: January 5th, 2018, 9:59 pm I worked at one of the biggest Kroger location in the Atlanta market in 2016. We had execs from Cincinnati come through all the time and, as an hourly, you did hear things. One of things which was made clear was that Kroger was NOT buying Winn Dixie or SEG for one reason - debt load was FAR too high. SEG is very badly leveraged, and LSF is one of the reasons its that way. That being said, SEG has two things going for it; a great distribution network and favorable leases at many of its current WInn Dixie locations. Remember, SEG sold the Bi-Lo holdings which were underperforming to Food City, which meant Bi-Lo left NW Georgia, Chattanooga and NE Alabama.

This is just theory about SEG: Winn Dixie will either be completely converted over to Harveys as part of a massive rebranding and spun off or Bi Lo will be spun off if SEG is serious about survival (I have zero reason to believe they are right now). Kroger would not be able to go toe-to-toe in Florida right now because so many midwesterners have a bad taste in their mouth from Kroger years ago - Atlanta Kroger is a COMPLETELY difference animal from the rest of the country, mostly because ATL is a hyper-competitive grocery market. My money is on Royal Delhaize buying SEG and rebranding Winn Dixie in Harveys OR (and this IS a reach), rebranding the stores into an entirely new concept. Now, that being said, there is a nasty little rumor going around the Royal Delhaize is eyeing Kroger for a mega-merger, but something tells me RD is waiting for SEG to go into BK court and snatch them up at a bargain price from LSF.

And you can forget SEG being bought by Ingles - that's a company which has a different set of issues, and Ingles has no desire to inherit those of SEG.
First, Southeastern Grocers does not have a distribution network. Winn-Dixie and BI-LO distribution centers were divested to C&S Wholesale Grocers.

Second, there are BI-LO and Winn-Dixie stores with favorable leases, leases that are expiring. I project the number of stores with expiring leases closing will increase. Stores with expiring leases have already closed.

Third, Ingle's Markets is not going to acquire any stores, specifically BI-LO. It is obliterating BI-LO stores in North Carolina and South Carolina. Ingle's Markets could be an acquisition target for The Kroger Company. I doubt the Ingle family has interest in selling out.

Fourth, I can see a quantity of quality store locations, likely BI-LO, being acquired by Publix.

Fifth, Ahold Delhaize USA is occupied with Food Lion, Giant-Carlisle (Pennsylvania)/Martin's, Giant-Landover (Maryland), Hannaford, and Stop & Shop. Food Lion will be a project as a work in progress or for quantities of stores closing.
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Re: Analyst: SEG will not be around in 5 years

Post by Knight »

pseudo3d wrote: January 6th, 2018, 6:21 am Why would Ahold buy SEG? They were the ones to offload BI-LO to LSF in the first place.
Ahold previously owned BI-LO. BI-LO has steadily decayed post-Ahold's ownership. The logic I could see is Ahold Delhaize USA operating BI-LO stores in South Carolina where Food Lion stores are failing. BI-LO and Food Lion do not have optimistic futures in South Carolina.
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Re: Analyst: SEG will not be around in 5 years

Post by wnetmacman »

Knight wrote: January 6th, 2018, 7:10 am First, Southeastern Grocers does not have a distribution network. Winn-Dixie and BI-LO distribution centers were divested to C&S Wholesale Grocers.
..but those warehouses are specifically dedicated to Winn-Dixie and Bi-Lo. They do not distribute elsewhere.
Knight wrote: January 6th, 2018, 7:10 am Second, there are BI-LO and Winn-Dixie stores with favorable leases, leases that are expiring. I project the number of stores with expiring leases closing will increase. Stores with expiring leases have already closed.
This is true. A store in Lafayette, LA recently closed for no other reason than the lease was up. WD has since taken all the equipment out of the store, essentially taking it down to the walls. They left the decor up, though....
Knight wrote: January 6th, 2018, 7:10 am Third, Ingle's Markets is not going to acquire any stores, specifically BI-LO. It is obliterating BI-LO stores in North Carolina and South Carolina. Ingle's Markets could be an acquisition target for The Kroger Company. I doubt the Ingle family has interest in selling out.
I agree; Ingle's is much like Brookshire; they want to keep it in the family. Short of biiiiiiig money, they won't sell out.
Knight wrote: January 6th, 2018, 7:10 am Fourth, I can see a quantity of quality store locations, likely BI-LO, being acquired by Publix.
There are only about 10 quality Winn Dixie locations. Not too sure about Bi-Lo, and the Harvey's/Fresco Y Mas conversions are simply paint on a turd. All the others are old stores not worth the trouble.
Knight wrote: January 6th, 2018, 7:10 am Fifth, Ahold Delhaize USA is occupied with Food Lion, Giant-Carlisle (Pennsylvania)/Martin's, Giant-Landover (Maryland), Hannaford, and Stop & Shop. Food Lion will be a project as a work in progress or for quantities of stores closing.
Three companies whose power to acquire/merge I do not ever discount: Albertsons, Kroger, and Ahold Delhaize. While AD does have their hands full, they aren't so full to take on more, especially after the merger divestments.

I could see AD using Food Lion as a Winn Dixie coverup for a while though. The two are about equal in terms of store type.
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Re: Analyst: SEG will not be around in 5 years

Post by Knight »

C&S Wholesale Grocers' Mauldin, South Carolina, distribution center serves BI-LO and Piggly Wiggly stores.

Winn-Dixie and Food Lion are equals indeed...in failure.
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