Winn-Dixie gets new chief exec

Winn-Dixie kicks out president.
MIAMI -- Winn-Dixie Stores on Friday dumped its top executive, who had led the supermarket chain during a significant restructuring, and replaced him with a former Albertson's official.
Peter L. Lynch, who had been president and chief operating officer of Albertson's for three years until July 2003, was unanimously chosen by Winn-Dixie's board of directors to replace Frank Lazaran as chief executive and president. Lazaran held the posts for just 18 months and had spearheaded an ongoing overhaul that included slashing workers and closing or selling stores.
The cuts, however, have failed to stem falling sales and the gush of red ink at the Jacksonville, Fla., chain.
Lynch will spend the next two months evaluating management, visiting stores and reviewing operations before charting a course. Lynch said in a phone interview he will look to enhance the improvements underway at its stores in south Florida, which he described as Winn-Dixie's "lead market."
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Winn-Dixie has been making over its 92 South Florida stores at a cost of as much as $60 million. Lynch wants to extend improvements made in the meat and bakery departments to other perishable categories like produce and floral.
"The impression I've got is things are moving in the right direction" in Florida, he said. Winn-Dixie is one of the leading employers in both Miami-Dade and Broward counties, two major Florida markets.
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Lynch wasn't very complimentary about Winn-Dixie's overall operations. The chain has about 1,070 stores and 113,000 employees, according to its website.
"Stores have not operated in the manner they should," Lynch said. "I believe with better execution in merchandising, customer service and other aspects of the stores, we can improve the image and sales performance of Winn-Dixie."
Not everyone shares Lynch's optimism.
"At the end of the day, this is a broken grocery retailer," said Mitchell Corwin, an equity analyst with Morningstar in Chicago. "I believe it is an act of desperation. I think the board really felt that by not making a change, Winn-Dixie was spiraling down into bankruptcy."
Lynch said there have been no discussions about Winn-Dixie seeking protection from creditors.
Corwin added, "I totally believe that they felt things weren't going to get better under Lazaran and that they needed to do something sooner rather than later." Corwin doesn't own the stock.
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Winn-Dixie's stock got a bounce from Friday's news, climbing 38 cents, or 9 percent, to close at $4.39.
Winn-Dixie has registered eight straight quarters of sales declines. Same-store sales, a key measure of a retailer's performance, were down 6 percent in its last fiscal year ended in June, and 3.8 percent in the first quarter ended Sept. 22. Winn-Dixie has struggled in the face of increased competition, especially from Wal-Mart.
This year has been particularly tough for Winn-Dixie. It stopped paying a dividend for the first time in more than half a century. It also was dropped from the Standard & amp; Poor's 500 index after recording the worst performance in the index last year.
The company posted a net loss of $153.1 million in the latest quarter, down from net income of $1.2 million in the same period last year.
About $83 million of the loss in the latest quarter was connected to restructuring charges for store closings and employee terminations. Earlier this year, Lazaran announced plans to close or sell 156 stores and cut 10,000 jobs. The cutbacks were designed to save $100 million a year.
"Peter's hiring does not mean we are abandoning the strategic initiatives we have underway to improve the business," H. Jay Skelton, Winn-Dixie's chairman, said in a conference call. "On the contrary, the board believes the initiatives are focused on the right areas. We do believe, however, that Peter's skills and experience will better enable us to execute these initiatives and deliver a better retail-shopping experience for our customers."
Lynch was responsible for operations, merchandising and marketing for 2,500 stores while at Albertson's. He also oversaw the elimination of 200 stores and $500 million in savings at Albertson's, according to a Winn-Dixie news release. Albertson's stock fell by about a third during Lynch's tenure as president and COO. He has 30 years of experience in food and drug retailing.
While others have painted a bleak picture of Winn-Dixie's future, Lynch is upbeat.
"I came here to improve sales and improve the bottom line, and I believe there is an opportunity to get that done," he said. "If I thought the show was over, I wouldn't be here."
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