Dave's too late: Winn-Dixie stores announce bankruptcy

Just three days after a feel-good motion picture bearing its name opened nationwide, Winn-Dixie Stores Inc. issued a feel-bad announcement: bankruptcy.

Winn-Dixie has been struggling unsuccessfully to reverse its sagging fortunes for years with store improvements, management changes, and attempts to cut costs by closing stores and laying off workers. And some experts question whether the company will ever be able to fend off the competition.

"I don't believe the company will be able to fight off the Wal-Mart Supercenter tsunami,'' said Burt Flickinger, who follows the retail industry for Strategic Resources in New York. "It's literally the biggest tragedy in American business last century. It's absolutely tragic. The company ... got wiped out by Wal-Mart.''

Winn-Dixie filed late February 21 for Chapter 11 protection from its creditors in U.S. Bankruptcy Court for the Southern District of New York. The company listed assets of $2.2 billion and total liabilities of $1.9 billion. It said it had secured $800 million in credit from Wachovia Bank to help pay for its reorganization.

A Chapter 11 filing allows the company to keep operating while it works out a plan to repay its creditors and return to profitability. The company listed Kraft Foods, which is owed about $15 million, and Pepsico and its subsidiaries, which are owed $14.6 million, as its biggest creditors.

The Jacksonville-based company said in a release that it plans to use the reorganization process to improve its operations and financial performance, but also to reduce its expenses and decide how to use its assets to make its stores more productive.

"This includes achieving significant cost reductions, improving the merchandising and customer service in all locations and generating a sense of excitement in the stores,'' said Peter Lynch, president and chief executive officer. The former Albertsons Inc. executive was hired in December to turn Winn-Dixie around.

The company said 920 Winn-Dixie stores in eight states and the Bahamas will remain open. It has about 79,000 employees, including 33,000 who work full-time.