|  |
For Peter Lynch, chairman, president and chief executive officer of Winn-Dixie Stores, thekey word going forward is “momentum.”
After years of struggle, Jacksonville, Fla.-based Winn-Dixie seems to have the Big Mo — in terms of financial results, store remodeling results, neighborhood marketing programs and private-brand improvements — and it’s up to Lynch to keep it going.
In his four and a half years at the helm, Lynch has helped turn Winn-Dixie’s negative results around, with sales increases and gross margin improvements for five consecutive quarters and positive operating income for four of the last five quarters.
“People counted us out,” he told SN, “but we got ourselves out of Chapter 11 in fairly short order [in November 2006], and since then we’ve met and exceeded expectations and been a real success story.”
Winn-Dixie’s primary strategy has been to invest capital in its store base at a rate of 75 units a year. It was right on target for the fiscal year that ended June 25, with sales at 75 remodeled stores growing at a rate exceeding 12% on a weightedaverage basis.
Lynch said the company expects to remodel half its stores over the next two years to deliver what he called a“fresh and local” shopping experience.
According to Gary Giblen, executive vice president at Goldsmith & Harris, New York, “Peter has done an incredible job holding that company together in a very difficult situation. His job was to stabilize the company, and he’s done that — it’s stable now, though not robust.”
Jim Hertel, managing partner at the consulting firm Willard Bishop, Barrington, Ill., offered a similar assessment. “Everyoneknew he was hopping into a tough situation where the challenge was exceedingly large. But now it seems he and the company have turned the corner,” he said.
The momentum could be impacted by a new challenge — the pending acquisition in September of 49 Florida Albertsons stores by Publix Super Markets, Lakeland, Fla., which plans to remodel the stores over a period of several months.
Lynch sought to reassure investors that the Publix acquisition will not affect Winn-Dixie’s stores too severely, noting that only 10 of the 49 are within a two-mile operating radius of a Winn- Dixie store that does not currently compete with an existing Publix.
However, he said, the company will “monitor business conditions and finetune product assortment, pricing and merchandising efforts in each store” to meet local needs.
“The question facing Winn-Dixie is whether this move by Publix prompts it to quicken the pace of transition, because if it can’t do that, then the Publix deal could be a significant hindrance,” according to Hertel.
Giblen said Winn-Dixie’s challenge will be exacerbated “by the fact that Florida has the weakest economic base in the nation, because it’s the most housing-impaired state.”
— ELLIOT ZWIEBACH
