Dive Brief:
- Southeastern Grocers is currently exploring a sale, The Wall Street Journal reported Thursday, citing sources familiar with the matter.
- The grocer, which operates around 420 stores across its Winn-Dixie, Harveys and Fresco y Más banners, canceled its push to go public a year ago.
- The news is further evidence of an uptick in merger-and-acquisition activity in the grocery industry, coming just a month after Kroger announced its intention to acquire Albertsons.
Dive Insight:
Southeastern Grocers has struggled for years to compete with Publix and other chains in Florida — the state where most of its stores are located. Although the retailer made a recent bid to go public and has focused on updating its stores and digital offers, this latest news indicates management is prepared to take more drastic measures.
A spokesperson for Southeastern Grocers said the company does not comment on “market rumors,” but noted the company has an obligation to shareholders to consider potential transactions.
“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,” the spokesperson said in an email.
The news comes on the heels of Kroger’s $24.6 billion bid for rival Albertsons — a deal that now faces a lengthy review process by federal regulators — as well as recent mergers among regional grocers, including Raley’s acquisition of Bashas’ and Price Chopper’s merger with Tops Markets.
Experts have predicted an uptick in M&A activity as grocers and consumers emerge from the irregular shopping habits that characterized the early days of the pandemic and as pressures like e-commerce and rising supply chain costs continue to weigh on companies.
Southeastern Grocers has focused in recent years on refreshing its stores. Its Winn-Dixie locations are getting a wider selection of fresh foods, new signage and meal offerings — a refresh similar to what other grocers are enacting as they confront increasing competition and an evolving consumer. Southeastern Grocers said it had remodeled more than half of its stores between 2016 and end of 2020 and said it planned to remodel around 55 stores per year, with the expectation of updating 97% of its stores by 2024, according to a public filing from January 2021.
In September, Southeastern Grocers announced the launch of a proprietary e-commerce platform that will offer delivery and pickup service.
The grocery company made a bid to go public in fall 2020 at a time when pandemic-fueled demand was driving record sales growth for food retailers. But it postponed its campaign just a few months later and officially withdrew its filing last October. The company never stated why it abandoned its bid, though Reuters reported at the time that tepid demand among potential shareholders was to blame.
Even as it remodeled a significant number of stores, Southeastern Grocers has also sold off numerous locations in an effort to improve its balance sheet. In 2020, it sold dozens of stores to buyers like Ahold Delhaize and Alex Lee as it jettisoned the Bi-Lo brand. In early 2018, Southeastern Grocers filed for bankruptcy, emerging just a few months later with more than half its $1 billion debt erased.
