JACKSONVILLE, Fla. -- Peter Lynch, chief executive officer at Winn-Dixie Stores here, said the retailer's recent bankruptcy filing hasn't changed his goals or his outlook.
"I was hired to turn this company around. Restructuring is synonymous with turnaround," Lynch told SN in an interview. "So I'm focused on the same things I was before -- that is, to reposition the company for the future. Now under Chapter 11, I've got some people helping me get there."
Lynch was referring to specialists retained by Winn-Dixie as part of its bankruptcy petition -- including those who will advise the company on lease obligations and disposition -- as it contemplates paring its franchise down from 920 stores in an attempt to craft a profitable base. Lynch told SN he would announce additional store and facility closings in the coming weeks. Bankruptcy papers indicated the deadline for lease disposition announcements is April 22.
Lynch, the former Albertsons executive who joined Winn-Dixie last December, inherited a chain fast approaching crisis levels. His first 75 days on the job included telling analysts the company had lost $400 million in its fiscal second quarter and telling employees the company had filed for bankruptcy.
Now he's hustling to smooth things over with vendors and employees, and to sell his vision for the beleaguered chain. So confident is Winn-Dixie's board in Lynch's ability to succeed, it offered him a bonus of $1.5 million to stay through the end of the year.
On the morning of the bankruptcy announcement, Lynch met with around 1,400 Winn-Dixie employees gathered in Jacksonville, with many more patched in by phone, to lay out the facts of the filing and detail strategies the company would undertake to boost sales in the meantime. He repeated the process in meetings in South Florida, and in the company's Western and Northern divisions.
"I brought the company up to speed on why we filed Chapter 11, what Chapter 11 meant to them, what restructuring was all about, and told them that I'd be back to them within 30 to 45 days with a new footprint," Lynch said. "That obviously meant fewer stores, and a reduction of the workforce in the office buildings."
Lynch also spoke of initiatives under way at Winn-Dixie stores that could "move the needle on sales" and help introduce a sales culture among employees. As part of this, he announced he would name a "czar of customer service" for the chain who would report directly to him.
"This company has a produce division, a meat division, a bakery-deli division and a grocery division. But we're a customer business, and we don't have a customer-service division," Lynch said, adding that he had several internal and external candidates in mind for the job.
Lynch pointed to results of a companywide sales effort in the floral department for Valentine's Day as an example of the "low-hanging fruit" he intends to claim for Winn-Dixie.
"Everybody knocks this company about not having the ability to sell things, but six weeks ago I got together with the team and said, 'Hey -- let's really focus on flowers for Valentine's Day.' The team got focused, we did outstanding merchandising in the stores, and made sure we had the right service levels out there. And we increased floral sales for Valentine's Day by 38% vs. a year ago. That's a huge number. For the week, floral sales were up 8.6%. That's an example of what this company can do when you put in the right merchandising and the right people behind it."
While some industry observers expressed doubt that Winn-Dixie can reverse its fortunes over the long haul, Lynch is confident that given time, he can prove skeptics wrong. In Winn-Dixie, he sees dormant brand equity and assets well positioned to grow, even among strong competitors like Publix Super Markets, Lakeland, Fla., and Wal-Mart Stores, Bentonville, Ark.
"We have a lot of great locations in a lot of great markets that are growing. That's a nice place to start," he said. "What [Winn-Dixie] stands for is a good neighborhood market and a brand that was strong for many, many years. If you can fix the brand again, you've got a great opportunity to grow. The stores need to be cleaned up, merchandised the right way. You need to introduce a selling atmosphere to the culture and make sure you're driving sales. "The bad news is we've got Wal-Marts up against 80% of our stores. The good news is, they've come already and we won't have to go through it again," he added. "In my opinion, there's plenty of space to have Wal-Mart, Publix and Winn-Dixie."
Lynch acknowledged repairing relationships with vendors -- some of which the company owes millions to -- would be "challenging," but added, "I think our vendors also want us to succeed, because they don't want Wal-Mart to be their only customer.
"I want to explain to vendors how Winn-Dixie is positioned for the future and I'm going to ask them for their help so together we can drive this business forward."
Lynch likened fixing Winn-Dixie to the job of reversing the fortunes of Albertsons' Acme division in Philadelphia.
"Acme has a strong brand that was tarnished, sales were negative, morale was bad, earnings were headed for the tank and vendors were negative -- but we turned that company around to the point where it was driving very positive sales and very positive earnings," Lynch said. "A lot of what I had to do at Acme I'll have to do here.
"You need to get the team and the community behind you -- you had to show everybody a plan, and you had to demonstrate that you could win. If you do that, everybody will get behind you," he said. "It's kind of like Valentine's Day here -- they didn't believe they could do it and now they believe they can, and that was just one step of many steps to turn this company around."