Almost 200 of the 500 Winn-Dixie locations are expected to be closed before or soon after the bankruptcy filing, according to the sources who spoke with Bloomberg News and asked not to be identified because the process isn’t public.
Winn-Dixie has headquarters in Jacksonville, Florida and operates approximately 500 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. The company has had its present name since 1955 and traces its roots back to 1925.
On December 19, 2011, BI-LO, another Southeastern supermarket chain, announced plans to purchase Winn-Dixie. On March 9, 2012, Winn-Dixie became a wholly owned subsidiary of Southeastern Grocers. In 2015, Bi-Lo Holdings changed their name to Southeastern Grocers and remained in Jacksonville.
Winn-Dixie’s previous financial woes
Bi-LO has gone through a previous Chapter 11 bankruptcy proceeding, once in 2005 when it was Winn-Dixie and another in 2009. And today, many think Bi-Lo will find a way to get out from under the mess.
However, Bi-LO is still foundering from the more than $1 billion in debt following its 2005 buyout by Lone Star Funds. They have been talking with creditors for about a year now, hoping for a debt-to-equity swap, as well as alternatives such as asset sales, reports Bloomberg News.
Lone Star has been involved in both the 2005 bankruptcy of Winn-Dixie, handing over $150 million to help the company out when they emerged from the proceedings, and in 2012, Lone Star invested $275 million to help fund the purchase of Winn-Dixie in 2012.
Big-box retailers are killing the grocery store
The profit margins of many supermarket chains have been taking a hit from the aggressive marketing schemes being used by big-box stores like Wal-Mart and retailers, like Amazon. However, Amazon’s take over of Whole Foods in 2017 paved the way for Amazon to have a presence in brick-and-mortar stores,
This move has really shaken the supermarket industry to its core. The move has already caused chains like Kroger’s to make major investments into e-commerce. Another aspect of this growing issue is the number of lower-cost chains such as Aldi and Lidl that have opened.
Bottom line? We will have to keep an eye on the supermarket sector because we may very well be seeing more filings for Chapter 11 bankruptcies.
