Winn-Dixie’s struggling parent company Southeastern Grocers is undergoing a “strategic review” after a report from Bloomberg news that it could file for bankruptcy and close as many as 200 stores.
A report published over the weekend, citing unnamed sources, said Bi-Lo LLC, also known as Southeastern Grocers and the parent of Bi-Lo, Winn-Dixie and Harvey’s, is preparing to file for reorganization bankruptcy for the third time since 2005. The bankruptcy filing could come as early as March, Bloomberg said.
“Southeastern Grocers is undertaking an ongoing strategic review in advance of our unsecured bond maturity later this year,” said a statement from Southeastern Grocers spokesman Joe Caldwell. “The company’s business operations continue to be strong, as we serve our customers with quality and commitment by working seamlessly with our business partners every day.”
The company did not respond to a request for comment to the Orlando Sentinel, but the chain is the third largest grocery in Central Florida behind Publix and Walmart, but has faced difficulty against new competitors.
A bankruptcy could mean closing as many as 200 stores, Bloomberg reported, on top of dozens of stores closed by the chain in recent years.
Southeastern Grocers is based in Jacksonville and also operates brands such as Fresco y Mas and operates more than 700 stores with 50,000 employees, mostly in the southeastern United States.
Winn-Dixie has 23 stores in the Central Florida market, 10 with liquor stores, It also converted one Winn-Dixie store in the Pine Hills area to operate under the Harvey’s banner in August.
In the last three years, the company has changed leaders twice, revamped its pricing policy and changed its employee loyalty program while rebranding some of its stores and closing others.
The Bloomberg report said Southeastern Grocers is struggling with more than $1 billion in debt under private equity owner Lone Star Funds and that a debt-to-equity swap is also possible.
The grocery market has been in upheaval in the United States with grocery pressure from delivery options, Amazon’s 2017 purchase of Whole Foods and fast growth from low-price and high price niche grocers such as Aldi, Lucky’s Market and Earth Fare.
Winn-Dixie’s 2005 bankruptcy resulted in the closure of 326 stores and the company pulled out of markets in Texas, the Carolinas, Tennessee and Virginia.
A bankruptcy by Winn-Dixie and Southeastern Grocers wouldn’t be a surprise.
Credit rating agency Moody’s gave negative marks to Southeastern Grocers in November, noting that about $900 million in debt was set to mature in 2018 and 2019 and another $1.28 billion in debt outstanding.
“The high refinancing risk due to the company’s significant debt maturities in 2018 and 2019 is a cause for concern as the current capital structure is unsustainable,” said a statement from Moody’s vice president Mickey Chadha.
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