Winn-Dixie Closing Stores, Reorganizing Operations

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Winn-Dixie Closing Stores, Reorganizing Operations


In a bid to retrench amid lingering economic malaise, Winn-Dixie Stores, Inc. said this week that it would close 30 non-renovated, underperforming locations, in addition to consolidating its four operating regions into three and cutting both field and corporate-support positions.

“We continue to operate in a particularly difficult economic and retail environment in the Southeast,” explained Winn-Dixie chairman, CEO and president Peter Lynch. “To respond to these business and economic conditions, we have thoroughly reviewed our retail operations and support structure and have decided to exit certain retail locations and reduce our corporate and field support staffs. We sincerely regret the impact this will have on some of our associates, and we will make every effort to ensure [they] can pursue other open positions or have a smooth and respectful transition.”

Along with employees of the closing stores who will be let go, the grocer plans to terminate about 120 corporate and field-support associates. As a result of these cuts, Winn-Dixie expects to save $12 million to $17 million annually, beginning after the close of the first quarter of fiscal 2011 because of timing and transition costs. The grocer plans to complete the store closures and layoffs by Sept. 22, the end of the first quarter of fiscal 2011.

“The actions we are taking today will enable us to lower our cost structure, improve efficiency, and build the right foundation for our business now and in the future,” according to Lynch. “With nearly half of our store base already remodeled, and with plans in place for additional remodels and new store openings, we are confident we will continue making significant progress with our ‘Fresh & Local’ strategy and business initiatives.”

A list of the 30 stores facing closure is available on Winn-Dixie’s Web site.

In connection with the actions announced today, the Company expects to incur charges in the range of $35 to $50 million in the first quarter of fiscal 2011. These charges include lease-related items of $30 to $45 million and other charges, including severance, of approximately $5 million. The operating results for the closed stores and the store closing costs are expected to be reported as discontinued operations in the first quarter of fiscal 2011.

The company also reaffirmed its guidance for fiscal 2010, at the low end of its guidance range of $140 million, to $160 million which it believes it achieved by effectively managing its promotional activity and cost control, in spite of a worsening fourth-quarter sales environment.

Further details on the grocer’s business plans are expected to come at the end of next month, when it will discuss its fiscal 2010 financial results and provide fiscal 2011 guidance.

Winn-Dixie operates 514 retail grocery locations, including more than 400 in-store pharmacies, in Florida, Alabama, Louisiana, Georgia and Mississippi.