Company plans to close 94 stores, reduce debt
The owner of the Winn-Dixie, BI-LO, Harveys and Fresco y Más chains said it would continue to operate its 582 other stores as it pursues a new path to long-term financial health.
“The agreement we announced today is 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,” Anthony Hucker, the company’s president and chief executive officer, said in a statement. “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. 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, said that it has entered into a restructuring agreement with a group of creditors holding 80% of the company’s debt, and that it is filing for a prepackaged reorganization plan under Chapter 11 of the Bankruptcy Code, typically used by debtors as part of a restructuring plan that keeps the business alive as it pays its creditors over time.
Southeastern Grocers said it aims to reduce its debt by $500 million, allowing the company to increase its capital expenditures budget for new stores and store remodels. The company said it expects to exit bankruptcy after 90 days.
Hucker took over as CEO last summer, succeeding Ian McLeod, who left to take another job. Southeastern 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.
“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.”