CFO SEEN RATIONALIZING WINN-DIXIE 2004-03-22 (2)

ELLIOT ZWIEBACH

JACKSONVILLE, Fla. -- Winn-Dixie Stores here appeared to move closer to its asset rationalization plan with the appointment earlier this month of a new chief financial officer, industry analysts said last week.

Bennett L. Nussbaum, the chain's new senior vice president and CFO, dealt with divestitures and also a leveraged buyout during his tenure with Burger King Corp., Miami, prior to joining Winn-Dixie two weeks ago, they pointed out.

Winn-Dixie officials could not be reached for comment last week.

Chain executives said in January the company planned to study asset rationalization and present its findings to the company's board for approval next month. Winn-Dixie operates nearly 1,100 stores in 12 Southern states and the Bahama Islands.

Andrew Wolf, an analyst with BB&T Capital Markets, Richmond, Va., said Nussbaum's hiring "represents fresh blood and looks like an upgrade for a company that has had most of the same management in place for years."

Although Nussbaum's hiring "doesn't point to any imminent actions, it does upgrade the breadth and depth of management. The company has already said it will rationalize the business, so it's relevant to analyze more options, and Nussbaum may be able to help it do that."

Wolf said Winn-Dixie "needs to leave markets where it's losing money and it doesn't make sense to stay" and to reduce its store geography "to Florida and some other core markets where profits are a possibility, though I'm not sure which ones those would be."

Mark Husson, an analyst with Merrill Lynch, New York, said in a published report Nussbaum's arrival at Winn-Dixie appears to eliminate the possibility the company will file for financial reorganization under Chapter 11. "We must assume a newly appointed CFO has not come on board to lead it through a Chapter 11 filing," he wrote.

Husson said he expects Winn-Dixie "can conduct a reasonably orderly disposal of peripheral unprofitable parts of the business."

He said he doubts Winn-Dixie will consider filing for a Chapter 11 bankruptcy reorganization "[because] the Davis family owns around 41% of the equity, [and] it is clearly anxious the equity should not disappear as evidenced by its willingness to let the dividend disappear. The family would rather sell the family silver and its old family portraits before letting the roof on the old family mansion fall in."

Aside from divesting stores outside its core markets, Husson suggested another possibility: for the Davis family "to liquidate some of its other investments or form a management buyout or a leveraged buyout to buy the 84-odd million shares it doesn't already own. Recent insider purchases are an interesting indication of the mood in the camp."