You don't need a feel-good flick to tell you that Winn-Dixie (OTC: WNDXQ) is a dog. The struggling supermarket chain filed for bankruptcy in the wee hours yesterday, even as Because of Winn-Dixie wins over theater audiences everywhere.
The grocery business can be cruel. While a lot of the stories on the sector's shortcomings seem to be the result of the labor struggles that hurt Safeway
Running a supermarket was already low-margin drudgery before Wal-Mart
It's been a gradual -- yet definite -- decline for Winn-Dixie over the years. Seven years ago, with the stock trading close to $40, we featured it critically in our Daily Trouble space. Earlier this month Stephen Simpson took a closer look at the company after a horrendous quarter. Posting its sixth-straight quarter of declining comps, with negative earnings and cash flow, Winn Dixie investors should not confuse this value trap with the turnaround potential of a true value stock, warned Stephen.
With trading in shares of Winn-Dixie suspended yesterday on the way to being delisted, Stephen nailed this bear trap.
But will bankruptcy save Winn-Dixie? The filing is simply a crutch. Winn-Dixie will come back, with fewer stores, but as long as it doesn't come back with a dramatic makeover that places it on even footing with either Publix (in appeal) or Wal-Mart (in pricing), it may as well just pack it in. Let the market remember that while Because of Winn-Dixie has a happy ending -- the chain may not.
Want to bag some more of Winn-Dixie's headlines?
- Read about Winn-Dixie's dreary quarterly report.
- Go retro with the 1998 Daily Trouble obituary on the grocer in decline.
- Is it just coincidence that the chain's CEO hire in December was named Lynch?
- Still hungry? Check out our Recipes discussion board.
Longtime Fool contributor Rick Munarriz does most of his shopping at Publix, even though Winn-Dixie is closer to his home. He does not own shares in any company mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
More from The Motley Fool
What's Juno Therapeutics Worth to Celgene?
Celgene may be considering a multibillion-dollar bid to acquire Juno.
PTC Inc. (PTC) Q1 2018 Earnings Conference Call Transcript
PTC earnings call for the period ending December 31, 2017.
Why Ascena Retail Group Inc. Stock Plunged 62% in 2017
The parent company of maurices just finished a tough year. Here's what investors need to know.