US Supermarket chain Winn-Dixie to cut 22,000 jobs |
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Thu, 23 Jun 2005 01:35
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US Supermarket chain Winn-Dixie has announced plans to shut down 326 stores, three distribution centers and nine manufacturing plants. The Jacksonville, Florida-based grocer is also cutting its workforce by about 28 percent which means that 22,000 people will be out of jobs.
The main reason for the loss of these markets is the emergence of retailers like Wal-Mart and Publix Super Markets. Commenting on the situation that Winn-Dixie is in, company's chief executive, Peter Lynch, said in a statement, "Creating a smaller but more profitable store base will best position Winn-Dixie for long-term financial health and a successful future. We will be focusing our resources on markets where Winn-Dixie has a strong presence and there are compelling opportunities. We regret the impact these tough decisions will have on many of our associates, customers and local communities. We do not take these decisions lightly and would not be proceeding if these steps were not essential to restore Winn-Dixie's financial health."
Winn-Dixie was a victim of its own follies as it failed to match the growth and expansion of Wal-Mart, Neil Currie, a retail industry analyst at UBS Securities commented, "One reason Wal-Mart was allowed to grow as much as they did was because the supermarkets didn't protect their businesses. They tried to protect their profit margins rather than protect their customers. They handed the business model to Wal-Mart."
However, Candace Corlett, a retail analyst at WSL Strategic Retail, a consulting firm, was not convinced, "The modern grocer needs to stop blaming Wal-Mart and focus on improving the shopping experience. Being just another supermarket isn't going to cut it. Food Lion's new Bloom stores are competitive because they are focused on customers. Winn-Dixie proves that you can't keep your eye fixated on the bottom line and keep your customers," Corlett said.
Winn-Dixie hopes to net about $7.5 billion in annual revenue after selling the 326 stores. Winn-Dixie had filed for bankruptcy protection from creditors in February.
Mitchell Corwin, equity analyst for research firm Morningstar Inc, said, "They're in a bleak position right now. The odds are really stacked against them. Vendors aren't treating them as they treat their top accounts, which isn't surprising -- they're in bankruptcy."
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