February 21, 2008
CEO: Winn-Dixie is ‘Rocking and Rolling’
Most analysts were looking for Winn-Dixie to record a loss in the last quarter. Instead, the company surprised Wall Street with a profitable quarter that has the supermarket chain’s CEO Peter Lynch feeling good about its prospects.
“All the key indicators are rocking and rolling the right way,” he told The Times-Union.
“I’m extremely pleased with our progress in the second quarter and the first half of the year,” he added. “The company is executing our turnaround plan flawlessly.”
For the quarter, Winn-Dixie saw a 0.5 percent increase in same store sales while achieving gross profit margins of 26.7 percent. Its gross profit number was a percentage point higher than the same period a year earlier.
Some have questioned Winn-Dixie’s ability to compete against the likes of Publix and Wal-Mart, particularly in an economic environment where consumers are throttling back on purchases.
Mr. Lynch doesn’t share those concerns. “Supermarkets do well in tough times,” he said.
Discussion Question: Has Winn-Dixie found its niche to achieve success in the competitive Florida grocery market? What do you see as the challenges and opportunities ahead for the chain?
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Any struggling supermarket company can show a profitable quarter from time to time. Eventually, the bomb gets dropped sooner or later and the losses are reported again. With strong inflation in supermarket sales, Winn-Dixie is losing lots of market share if same store sales are only .5%.
Keep in mind that the sales per square foot at Winn-Dixie is one of the worst in the country, if not the worst of any chain. Winn-Dixie is facing an onslaught of competitors returning to Louisiana that were displaced by the hurricanes. Publix will be adding several new stores in Alabama specifically targeting some of Winn-Dixie’s best stores. In Florida, Aldi is moving in and will open a new division of several stores. If Winn-Dixie wants to jump for joy, well fine and dandy, but the road ahead of them looks as difficult as ever. Winn-Dixie still can’t compete with Publix on service and can’t compete with Wal-Mart on price. They are still a company without a niche.
I wish Peter Lynch and all the folks at Winn-Dixie continued success in their journey toward sustained excellence.
That said, “rocking and rolling” as a descriptor suggests far more progress than the facts thus far would seem to indicate.
I spent the better parts of December and January in Fort Lauderdale. I was there for so long that I was able to compare Winn-Dixie to Publix quite frequently.
Winn Dixie can, and does compete well with Publix. Sure, the store is not as big as a Publix but that is their advantage. Selection was good, the store was clean and the prices were comparable. It’s also easier to get in and out of a Winn-Dixie.
I’ve seen plenty of discussion about a move back to smaller-store formats. I am not sure Publix could do this; people expect way too much from them. On the other hand, Winn-Dixie is naturally a smaller store so they already know how to play the game. They still have a few things to work on but overall, I see them as a must-have in the grocery world. Man cannot survive on Publix and Wal-Mart alone. Competition is healthy and natural.
I am not at all surprised by Winn-Dixie’s performance. I attribute it to the leadership of Peter Lynch. He epitomizes my definition of a leader: a preacher of vision and a lover of change.
Everyone expected WD to attempt to compete head to head with WM. Lynch realized that this approach would hasten the demise of a once proud retailer. He recognized the problems caused by years of complacency and neglect and has developed a plan to address these problems.
Now he is attempting to establish WD’s unique position in the market and has developed some great advertising whose tag line is “getting better every day.” And according to all results they are getting better every day–a great case study.
Winn-Dixie is the type of supermarket that will do well in the current southeastern U.S. economic environment, particularly in Florida.
This is an amazing story and hopefully a great comeback. Winn-Dixie will need to stay on top of service and product.
By product, I mean their overall experience. The “old” Winn-Dixie had become tired and dirty. Quality was lackluster and innovation was non-existent. There is room for a sparkling competitor in this market but that competitor will have to stay on their toes because Publix does a great job on execution.
Winn-Dixie has had some considerable analytical support from Deloitte Consulting over the past year. It is great to see a retail company that invests in creating the plan, then invests in executing the plan. They may not have the fanciest stores in every market, but a strong emphasis on good brands at good prices will keep shoppers in the stores. If they can deliver anything over and above that in the shopping “experience” and emphasize convenient trips, they will continue to make shoppers happy! I wish them the best, and would shop their stores as a show of support if they had any in my area!
Too little, too late. They’re not just competing with Publix, but every other quality chain out there–think Sweetbay–, plus the countless one-two store ethnic operators. W-D should have cleaned up long, long ago.
Chapter 11 bankruptcy can be a great way to get rid of bad locations and reduce other wasteful overhead. Winn-Dixie has joined Toys R Us, Macy’s, and many other retail chains as proud graduates of the University of Chapter Eleven. It’s now Peter Lynch’s role to make sure Winn-Dixie remains a successful alumnus, unlike the many alumni who file Chapter 11 again (Levitz) or those alumni who get liquidated (too numerous and depressing to list).
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Any struggling supermarket company can show a profitable quarter from time to time. Eventually, the bomb gets dropped sooner or later and the losses are reported again. With strong inflation in supermarket sales, Winn-Dixie is losing lots of market share if same store sales are only .5%.
Keep in mind that the sales per square foot at Winn-Dixie is one of the worst in the country, if not the worst of any chain. Winn-Dixie is facing an onslaught of competitors returning to Louisiana that were displaced by the hurricanes. Publix will be adding several new stores in Alabama specifically targeting some of Winn-Dixie’s best stores. In Florida, Aldi is moving in and will open a new division of several stores. If Winn-Dixie wants to jump for joy, well fine and dandy, but the road ahead of them looks as difficult as ever. Winn-Dixie still can’t compete with Publix on service and can’t compete with Wal-Mart on price. They are still a company without a niche.
I wish Peter Lynch and all the folks at Winn-Dixie continued success in their journey toward sustained excellence.
That said, “rocking and rolling” as a descriptor suggests far more progress than the facts thus far would seem to indicate.
I spent the better parts of December and January in Fort Lauderdale. I was there for so long that I was able to compare Winn-Dixie to Publix quite frequently.
Winn Dixie can, and does compete well with Publix. Sure, the store is not as big as a Publix but that is their advantage. Selection was good, the store was clean and the prices were comparable. It’s also easier to get in and out of a Winn-Dixie.
I’ve seen plenty of discussion about a move back to smaller-store formats. I am not sure Publix could do this; people expect way too much from them. On the other hand, Winn-Dixie is naturally a smaller store so they already know how to play the game. They still have a few things to work on but overall, I see them as a must-have in the grocery world. Man cannot survive on Publix and Wal-Mart alone. Competition is healthy and natural.
I am not at all surprised by Winn-Dixie’s performance. I attribute it to the leadership of Peter Lynch. He epitomizes my definition of a leader: a preacher of vision and a lover of change.
Everyone expected WD to attempt to compete head to head with WM. Lynch realized that this approach would hasten the demise of a once proud retailer. He recognized the problems caused by years of complacency and neglect and has developed a plan to address these problems.
Now he is attempting to establish WD’s unique position in the market and has developed some great advertising whose tag line is “getting better every day.” And according to all results they are getting better every day–a great case study.
Winn-Dixie is the type of supermarket that will do well in the current southeastern U.S. economic environment, particularly in Florida.
This is an amazing story and hopefully a great comeback. Winn-Dixie will need to stay on top of service and product.
By product, I mean their overall experience. The “old” Winn-Dixie had become tired and dirty. Quality was lackluster and innovation was non-existent. There is room for a sparkling competitor in this market but that competitor will have to stay on their toes because Publix does a great job on execution.
Winn-Dixie has had some considerable analytical support from Deloitte Consulting over the past year. It is great to see a retail company that invests in creating the plan, then invests in executing the plan. They may not have the fanciest stores in every market, but a strong emphasis on good brands at good prices will keep shoppers in the stores. If they can deliver anything over and above that in the shopping “experience” and emphasize convenient trips, they will continue to make shoppers happy! I wish them the best, and would shop their stores as a show of support if they had any in my area!
Too little, too late. They’re not just competing with Publix, but every other quality chain out there–think Sweetbay–, plus the countless one-two store ethnic operators. W-D should have cleaned up long, long ago.
Chapter 11 bankruptcy can be a great way to get rid of bad locations and reduce other wasteful overhead. Winn-Dixie has joined Toys R Us, Macy’s, and many other retail chains as proud graduates of the University of Chapter Eleven. It’s now Peter Lynch’s role to make sure Winn-Dixie remains a successful alumnus, unlike the many alumni who file Chapter 11 again (Levitz) or those alumni who get liquidated (too numerous and depressing to list).