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Winn-Dixie to overhaul 650 stores
By MARK ALBRIGHT © St. Petersburg Times, published October 5, 2000 JACKSONVILLE -- As its financial performance continues to deteriorate, Winn-Dixie Stores detailed plans Wednesday to spend $144-million in the coming year shrinking store space dedicated to perishables such as salad bars, melon bars, produce and deli counters. Described as right-sizing, the overhauls will be done in 650 of Winn-Dixie's 1,079 stores to make them more profitable. The move is a final admission that the company's $4-billion program to expand and remodel almost all its supermarkets over the past seven years was a big mistake. Already Jacksonville-based Winn-Dixie has been cutting back on chefs hired to enhance the chain's prepared meals-to-go deli offerings. Now it plans to chop the overall perishable space from 37 percent to 23 percent of a typical store. The empty space will be filled with dry groceries and general merchandise. While perishables are among the top three reasons people shop where they do, Winn-Dixie hopes to do a better job of it with less space. Perishables spoil quickly and can be a huge drain on profits. Winn-Dixie thinks it can do better by displaying less to keep the assortment fresher. More produce also will be chopped up and packaged in carry-out containers in refrigerated cases than left out to spoil and be thrown away. Tested in 21 stores so far, the smaller perishables offering, reduced hours at 24-hour-a-day stores and elimination of service departments such as dry cleaning is supposed to carve $400-million a year out of the company's expenses. The plan was outlined at the company's annual meeting by Al Rowland, the former Albertson's Inc. executive brought in to overhaul Winn-Dixie in November. The energetic Rowland, 56, spent an hour explaining to shareholders his comprehensive approach to win back customers with sharper pricing, improved customer service and cleaner stores. "This is a new Winn-Dixie," he said. "We've got to run better stores." Meanwhile, the company, which has suffered four consecutive years of decreasing earnings largely because its bigger stores were less profitable, posted another decline in its fiscal 2001 first quarter ended Sept. 20. Net income was $9.4-million, or 7 cents a share, down from $22.1-million, or 15 cents a share, in the comparable year-ago period. Revenues slid 7 percent to $2.9-billion, down from $3.2-billion. Sales in stores open more than a year decreased 2.8 percent. Excluding one-time restructuring charges, Winn-Dixie met analysts' expectations with earnings of 11 cents a share. Winn-Dixie shares, which lost half their value since Rowland arrived to orchestrate a turnaround, closed Wednesday at $14.25, down 25 cents. Rowland has been an agent of change already. In April, Winn-Dixie closed 116 unprofitable stores, eliminated 11,000 jobs and closed three division headquarters, including one that employed 200 people in Tampa. Some of the stores closed had been open less than a year. Rowland centralized purchasing and real estate decisionmaking, wiping out two layers of middle management. Winn-Dixie has put up for competitive review its advertising agency contract, threatening a 40-plus-year hold on the account by Cook Marketing Communications Inc. of Jacksonville. Once criticized for inbred management, six of Winn-Dixie's 14 new senior vice presidents came from outside the company and job responsibilities of holdovers were scrambled. "Only a few people in the top management are doing the same job they had been," said A. Dano Davis, the company's chairman who stepped aside and recruited Rowland last year. Buffetted a year ago by rumors the chain was being packaged to be sold, Davis, whose family controls 42 percent of the stock, said Wednesday his family was in it for the long haul. Now Rowland has moved on to coaxing the chain's employees to be friendlier and helpful. Each store gets a Winn-Dixie Nite, an periodic evening session held outside the store where district managers and trainers get feedback from store employees and offer instruction in how to do their jobs better. The detail goes down to suggesting each cashier ask each customer, "Is there something we missed that could have made your shopping here better?" Not everyone has noticed a difference. One shareholder cited a frequent complaint that Winn-Dixie stores "are just not clean." "Mrs. Homemaker is not going to tolerate it when other chain's stores are so much more spick-and-span," said Art Dismukes, a retiree who has seen the value of his 3,000 Winn-Dixie shares plummet more than 75 percent in the past few years. Rowland promised more emphasis on cleanliness. Employees are getting more training. The company also installed emergency phone lines for any store that does not get a top rating from health inspectors to immediately call a district manager. The manager will visit the store to find out why it didn't get a top rating and get one reinstated quickly. The company also initiated several experiments to bolster profitability. Gas pumps are being tried at two stores, a liquor store is being tested in Melbourne and Winn-Dixie's first Save Rite grocery store is about to open in Jacksonville. Save Rite will be a so-called warehouse store. That's a supermarket format usually found in lower-income neighborhoods where customers bag their own groceries and pick from products displayed in their shipping crates to give the impression of lower prices.
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From the Times Business report
From the AP
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