Winn-Dixie Cuts Costs, Publix Stays Put with Direct Service

Discussion
Apr 25, 2003
George Anderson

By George Anderson


Al Rowland, president and chief executive officer, Winn-Dixie told Florida Today, “Given the difficult challenges that our economy and our industry face, we are encouraged with our ability to maintain profitability.”


Winn-Dixie sales for the quarter ending April 2 were down 2.7 percent from the previous year. Profits fell to $50.57 million versus $51.37 million for the same period.


Mr. Rowland said, “The timing of Easter as well as economic uncertainty and aggressive pricing and promotion by our competitors impacted the results of the quarter.”


Winn-Dixie was continuing to search for ways to cut costs, said Mr. Rowland, right “down to the ingredients” in its private label.


Another Florida-based chain, Publix told the Tampa Tribune it was putting plans to expand its PublixDirect home-shopping program to Atlanta and Orlando on hold.


Tom O’Connor, president, PublixDirect said, “I think there’s still a commitment by the company. We’ve pretty much hit projections. I just can’t say moving into other markets will make a significant difference to the bottom line of Publix.”


PublixDirect currently serves 7,000 customers a week in its current Florida markets according to Mr. O’Connor. The company stocks more than 8,000 items in its 140,000 square-foot warehouse in Pompano Beach.


Moderator’s Comment: What is your analysis of the latest
news from Winn-Dixie and Publix?


We always get concerned when an operator appears to be
trying to cut their way to success. Mr. Rowland’s remark about looking to cut
costs “down to the ingredients” in Winn-Dixie’s store brands caught our attention
right away.


PublixDirect faces the same “how to make money” dilemma
as all other grocery home-delivery programs. We’re not sure that any domestic
operation has come up with a satisfactorily profitable response to that question
as of yet.  [George
Anderson – Moderator
]

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