"Combine and conquer" is the motto at BI-LO Holding. The newly-formed parent company for the BI-LO and Winn-Dixie supermarket chains boasts about 690 stores across eight southeastern states. The BI-LO supermarket chain operates more than 200 BI-LO and Super BI-LO grocery stores in the Carolinas, Georgia, and Tennessee. Winn-Dixie operates about 480 combination food and drug stores in Alabama, Florida, Georgia, Louisiana, and Mississippi under the Winn-Dixie and Winn-Dixie Marketplace banners. BI-LO Holding was formed in 2012 when BI-LO's owner, Dallas-based investment firm Lone Star Funds, acquired Winn-Dixie for about $560 million and merged the two companies.
Change in Company Type
The March 2012 buyout of Winn-Dixie by Lone Star and its merger with BI-LO, joined two of the South's mainstay regional supermarket chains and expanded their scale with no geographic overlap. Post merger, BI-LO Holding moved its headquarters to Jacksonville, Florida, home of Winn-Dixie. Jacksonville is centrally located to serve BI-LO's eight-state operating area.
The BI-LO chain rang up an estimated $2.8 billion in sales in 2011, while Winn-Dixie's sales topped $6.8 billion. Combined the two companies are projected to have about $10 billion in annual sales, making BI-LO Holding one of the nation's top grocery store operators.
The company's strategy is to realize efficiencies from the combined operation of the two chains, although BI-LO and Winn-Dixie continue to operate under their own banners. However, functions, including supply chain, human resources, and store support, were combined.
Prior to their merger, both BI-LO and Winn-Dixie struggled to return to profitability, after both pursued bankruptcy protection. BI-LO emerged in 2010 after 13 months under Chapter 11 reorganization, armed with a five-year plan to become more competitive. Part of its turnaround plan includes newer, larger Super BI-LO stores (launched in 2005). The 58,000 sq. ft. stores boast expanded products selections, including plenty of organic and natural foods. The grocer has opened more than 15 Super BI-LO stores and is gradually converting traditional BI-LO stores to the Super BI-LO format. Despite their new heft, both companies face many challenges in an intensely competitive grocery market. Differentiating themselves from competitors is among the more daunting. Like many conventional supermarket chains, BI-LO is sandwiched between upscale grocery chains (including Whole Foods) at the high end of the market and deep discounters, including Wal-Mart Supercenters at the low end.
Mergers and Acquisitions
BI-LO is boosting its store count by 165 in fiscal 2013. Announced in May 2013, BI-LO is buying substantially all the stores in the Sweetbay, Harveys, and Reid's supermarket chains from Delhaize for $265 million in cash. The company anticipates closing the transaction during the fourth quarter. As part of the acquisition deal, BI-LO will add to its southeastern US holdings with 72 Sweetbay stores, leases for 10 prior Sweetbay locations, 72 Harveys stores, and 11 Reid's stores.