JACKSONVILLE, Fla. — Southeastern Grocers is shuttering 94 stores as it files for Chapter 11 bankruptcy protection and undertakes a restructuring.
The operator of the Winn-Dixie, BI-LO, Harveys and Fresco y Más chains will continue to run its 582 other stores as it seeks a new route to long-term financial health.
President and chief executive officer Anthony Hucker called the moves “an important step in Southeastern Grocers’ transformation to put our company in the best position to succeed in the extremely competitive retail market in which we do business.”
“With a foundation built on iconic, heritage banners, and with the strong support of our leadership team, we will work through this process as quickly and efficiently as possible,” he said. “We are excited to emerge with the optimal store footprint and greater financial flexibility to invest in Southeastern Grocers’ growth.”
The company, owned by Dallas-based investment firm Lone Star Funds, has entered into a restructuring agreement with a group of creditors holding 80% of its debt, and it is filing for a prepackaged reorganization plan under Chapter 11, typically used by debtors as part of a restructuring that keeps a business alive as it pays its creditors over time.
The supermarketer said it aims to reduce its debt by $500 million, allowing it to increase its capital expenditures budget for new stores and store remodels. The company said it expects to exit bankruptcy in late spring.
“Southeastern Grocers is faced with a critical milestone in its transformation, and we have made choices for our future and long-term growth potential,” Hucker said. “We conducted a thorough review of our strategic options and determined that this financial restructuring is in the best interests of our associates, customers, supplier partners and the communities in which we serve.
“Southeastern Grocers is a strong, viable business and is building momentum with robust performance and new store concepts that resonate with our associates, customers and communities. This course of action enables us to continue writing the story for our company and our iconic, heritage banners in the Southeast.”
Hucker took over as CEO last summer, succeeding Ian McLeod, who left to take another position. The chain has been investing in lower prices and store remodels, and converting some of its underperforming stores to either its discount banner, Harveys, or its Latino-oriented Fresco Y Más concept to achieve differentiation in a cutthroat retail environment.
“We expect our financial health and free cash flow to improve in the newly reorganized company,” said Hucker, adding that, closings notwithstanding, the grocer “is committed to ensuring that all associates continue to be treated with the utmost dignity, respect and compassion.”
It will continue to give customers “a store experience they can count on,” he said.