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NEW YORK - Struggling Southeast grocer Winn-Dixie has made the right choice by hiring noted "people person" and former Albertsons' executive Peter Lynch as its new president and c.e.o., observers agreed late last week.
But the decision may have been made too late in the game to spur a successful turnaround for Winn-Dixie, which has been losing market share to aggressive competitors, including Wal-Mart, Publix, Costco, BJ's, and Food Lion.
"Hiring Peter was the right thing to do, but it should have done a few years ago," Burt Flickinger, managing director of the New York-based consultancy Strategic Resource Group, told Progressive Grocer. "He has the ability, but he may not have time."
Winn-Dixie, based in Jacksonville, Fla., said Lynch, 53, who assumed his responsibilities immediately, also becomes a member of the company's board of directors.
Lynch replaced Frank Lazaran, 48, who had been named chief executive and president of Winn-Dixie in June 2003, after having joined the company as e.v.p. and c.o.o. in April 2002.
Early this year, Winn-Dixie launched major strategic initiatives designed to grow profitable sales, reduce expenses, enhance operating results, and grow long-term profitability.
The initiatives included an expense reduction plan, and a core market analysis and rationalization review. However, the seemingly necessary changes have chipped away at the chain's potential for generating profits. In the first quarter of 2005, Winn-Dixie reported a whopping net loss of $153 million. In the fourth quarter of 2004, net losses had been $22.72 million. Earlier this month Winn-Dixie was dropped from the Standard & Poor's 500 index because of its poor performance.
Winn-Dixie has said it expects to incur from $50 million to $60 million by March 2005 from the total cost of its lead market initiative, including capital expenditures, training, store resets, and other costs.
Meanwhile Lynch inherits a chain in critical condition.
"Lynch faces a Herculean task," noted Flickinger. "He's an eternal optimist, but the odds are heavily stacked against him."
Lynch most recently served for three years as president and c.o.o. of Albertsons, Inc. During his tenure, he led a strategic initiative that included a 200-store asset rationalization and a $500 million expense reduction program.
Prior to his stint at Albertsons corporate, Lynch served in a variety of executive positions at chains that Albertsons operates, including president of Acme; s.v.p., store operations at Jewel/Osco; and president of Star Markets Co., where he began his career.
-- Jenny McTaggart