Published on 11/28/2005

We have recently seen the grocery store strikes in California and the attacks on the Industry for anti-trust. We have seen poor performing stocks in this sector for years now. Wal-Mart Super Stores are also making a huge dent in the industry forcing grocery stores to exit markets where they are located too close to Wal-Marts. Recently Winn-Dixie announced it would close 326 stores and cut 22,000 jobs as their CEO Peter Lynch said that the closings would reduce revenue from $10 billion to $7.5 billion next fiscal year.

Are these closings going to help the company as it exits poor performing markets or is the company and the industry in a downward sector rotation spiral? Winn-Dixie is cutting heavy in Florida before Hurricane Season and will close twelve stores a seven-County Bay area in Florida. These store closings are Webb Plaza in St. Petersburg; N.W. Plaza and Tampa Market Place in Tampa; Forest Lakes Plaza in Oldsmar; Valrico Square in Valrico; Ridge Plaza in New Port Richey; Northwood Plaza in Clearwater, Palmetto Market Place in Palmetto, Brandon Center in Brandon and one store in Wesley Chapel the company said. It will close 43 stores in the state in the state and keep the highly profitable ones.

Food Stores Taking a Hit

Winn Dixie has a few stores in TN, VA, which it intends to exit completely now for distribution streamlining as well as close many stores in North and South Carolina where it has significant market share. Winn-Dixie is also taking out some of its distribution centers in Atlanta, Charlotte, and Greenville and downsizing the one in Montgomery.

This trend of streamlining operations seems to be happening more and more as some non-performing stores are being over taxed by costs of lawsuits, unions and of course the ever present Wal-Mart Super Centers. One question the consumer must be asking is where will I buy food if all these stores keep closing. That answer is Wal-Mart with their superior distribution system and non-union stores. Think on this