Southeastern Grocers Sets IPO Price

Offering could raise $163.7M for selling stockholders
Winn Dixie kitchen
Photograph courtesy of Southeastern Grocers

Southeastern Grocers has set a price $14 to $16 per share for its forthcoming public stock offering, a price that would raise $163.7 million for its selling stockholders, the company said in a newly updated S-1 filing with the Securities and Exchange Commission.

The Jacksonville, Fla.-based parent of the Winn-Dixie, Harveys and Fresco Y Mas banners also shared preliminary financial results for its recently completed fourth quarter and fiscal year, indicating that pandemic shopping trends and positive results from its lengthy turnaround have delivered robust sales momentum and turned years of losses into growing profits.

Unaudited results for the 53-week fiscal year that ended Dec. 30 indicates sales would total $9.6 billion, or $8 billion excluding the Bi-Lo stores it has sold or intends to sell as part of its strategy. That’s a 15.7% increase over fiscal 2019 sales.

Comparable-store sales are expected to be up by 16.3% for the year and 11.4% for the fourth quarter. Excluding the panned dispositions, comps were up by 17.3% for the year and 12.5% for the quarter. The fourth quarter figures include stores that were closed on Thanksgiving day this year. Adjusting for that, quarterly comps would have been about 14.7%, Southeastern said.

Net income for the 53-week year is expected to be between $317 million and $424 million, as compared to a net loss of $116.2 million for the 52-week 2019 fiscal year.

The increase in net income is primarily related to the comp sales boost and leverage experienced in gross margin and operating expenses.

Adjusted EBITDA is expected to be between $580 million and $595 million for the year, as compared to $292.5 million. The increase in is primarily due to the increase in comparable-store sales and improved sales leverage experienced in gross margin and operating, general and administrative expenses.

Southeastern at the end of its fiscal year operated 523 stores, but giving effect to ongoing plans to close or sell Bi-Lo stores and other units in the Carolinas, intends to run 423 units. It said it intends to open about 10 new stores a year beginning in fiscal 2022 while renovating about 55 stores a year. Renewed stores have been a significant component in improved performance, the company has noted. Southeastern in the filing said it expected to have completed 180 renewals since the beginning of fiscal 2016, or about 55% of its fleet. Its goal is to complete 97% of the chain by 2024 and attain an average store age of less than four years. Renovated units open for more than a year as of Sept. 30 experienced an average sales increase of approximately 10% and a return on investment that exceeded internal 20% target. 

For the 134 renewed stores that have been open for longer than 12 months, as of Sept. 30, 2020, Southeastern experienced an average sales increase of approximately 10% and a return on investment that consistently exceeded an internal 20% target

Southeastern said disposition of Bi-Lo has allowed for greater focus and investment behind stores in Florida, where 76% of its units are located. Most of those are under the Winn-Dixie banner, which that company said has experienced increased market share as compared to traditional supermarket retailers and the multioutlet market, citing IRI Worldwide industry data.

Lone Star a Big Seller 

Selling stockholders identified in the latest filing include funds associated with Osterweis Capital Management, LSF7 Bond Holdings, Alliance Bernstein, First Eagle Investment Management, Deutsche Bank, Fidelity Investment and Mill Street Capital Management. All but LSF7—an 11.6% owner associated with Lone Star Funds, the hedge fund that was a significant investor in the company and its predecessors dating back for years—will retain some stock following the offering.

As previously reported, selling stockers are to receive a special dividend the new filing said would be $6 per share on a pre-split basis—or approximately $60.6 million—upon consummation of its offering. “Given our financial performance since the reorganization in May 2018, we believe the special cash dividend is an appropriate means to provide our stockholders with a return on their capital,” the company said in the filing.

After the IPO, Fidelity would remain the company’s largest owner with 20.9% of its shares, along with Millstreet (14.3%), Osterweis (12.4%), Deutsche Bank (8.2%), Amzak Capital (8.2%), Alliance Bernstein (5.8%) and First Eagle (1.4%). Southeastern's executive officers and directors own less than 1% of company stock

The company also noted in the release that it would add another new board member—Jodi Kahn, a former chief consumer officer of New York e-commerce grocer FreshDirect—upon the IPO.

At FreshDirect, which Kahn served between August 2013 and December, 2016, Kahn led the launch of meal kits and an on-demand service, FoodKick, since rebranded as FreshDirect Express. Prior to FreshDirect, Kahn led digital business units such as iVillage, a division of NBC Universal, and Kahn also spent 15 years at Time Inc., where she played a lead role in the AOL integration.


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