In a drastic case of Southern inhospitality, troubled grocer Winn-Dixie (OTC BB: WNDXQ) has announced that it will shut down 35% of its stores, trimming 28% of its payroll along the way. Ever since the company filed for bankruptcy protection back in February, it was just a matter of time before the company revealed plans to scale back its operations.
Retreating out of North Carolina, South Carolina, Tennessee, and Virginia entirely, the company is hoping that one giant step back will ultimately lead to its being able to take baby steps forward. By the time the closures are complete, the company will have slashed its store base from 913 to 587.
Naturally, a company committed to scaling itself down that much isn't looking to win the heart of growth investors. But at this point, Winn-Dixie just wants to stay alive.
It won't be easy. Closing its weakest stores doesn't mean Winn-Dixie will be any better suited to deal with the competition. The shots have come from all sides. On the traditional supermarket front, privately held Publix has done a better job of providing a more inviting conventional grocery-shopping experience. On pricing, Wal-Mart (NYSE:WMT) and now Target (NYSE:TGT) have fleshed out some of their locations to offer a wide range of discounted food products.
Then you have warehouse clubs like Motley Fool Stock Advisor recommendation Costco (NASDAQ:COST) and BJ's (NYSE:BJ) that have managed to win over a different breed of thrift-minded shopper, while Whole Foods Market (NASDAQ:WFMI) has succeeded in luring more affluent health-food enthusiasts.
That all adds up to why a leaner Winn-Dixie isn't the solution. What's the point, when the only real solution is a different Winn-Dixie? But then, as long as the company is in retreat mode, a makeover is unlikely to happen.
Want to bag some more grocery- and food-related links?
- Winn-Dixie filed for Chapter 11 bankruptcy earlier this year.
- That came on the heels of an absolutely 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 has a location that's nearer to his home. He does not own shares in any company mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
