Southeastern Grocers Inc., the Florida-based operator of the Winn-Dixie and Harvey’s supermarket chains, could be up for sale soon.
According to a report in The Wall Street Journal on Thursday which cited sources familiar with the matter, Southeastern is exploring a sale and is in talks with prospective buyers, furthering concerns over more consolidation in the retail grocery channel following Kroger’s announced merger with Albertsons.
The news comes a year after the southern supermarket operator withdrew its 2020 plan to go public and nearly five years since the company declared bankruptcy to restructure its debt.
Asked for comment, a SEG representative told NOSH: “We do not comment on market rumors. With that said, we are always reviewing ways to enhance shareholder value, and to the extent that credible strategic or other shareholder value enhancing transactions emerge, we have an obligation to consider them.
“While the potential for any such transaction remains ever present in our industry, we will remain focused upon advancing our transformational strategy, supporting our associates and delivering a world-class shopping experience for our customers.”
A prospective sale could further consolidate the retail grocery industry after Kroger’s blockbuster announcement last month of it plans to purchase Albertsons in a $24.6 billion deal. That transaction has already generated mounting opposition from lawmakers and multiple states’ attorneys general.
All these regional supermarket operators are looking for economies of scale that can help them compete against larger rivals like Walmart and Amazon, said William Bender, founder and principal of consulting firm W.H. Bender & Associates.“If you look at what’s happening with the Winn-Dixie deal with Southeastern Grocers, they’re saying ‘wait a minute, we’ve got to grow too or we’re gonna die.’”
Southeastern, a nearly 100-year-old company, operates 421 stores, more than 230 pharmacies and 140 liquor stores primarily in the southeastern states of Alabama, Florida, Georgia, Louisiana and Mississippi. In FY2019, it generated net sales of $8.3 billion, according to the 2020 Securities and Exchange Commission filing.
The company is a competitor of Florida-based supermarket powerhouse Publix who operate over 1300 stores in the Southeast and Mid-Atlantic regions.
Another potential motivation for Southeastern to seek a sale could be from losing its foothold in the region, Bender said.
“(Southeastern Grocers) have got to keep their stores up-to-date, consolidate with other stores to increase their brand and then at the same time, most critically, is sourcing and retaining team members and associates to really be ambassadors for the brand.”