Winn-Dixie parent Southeastern Grocers nixes IPO just as Albertsons and Kroger stock tanks
Winn-Dixie parent Southeastern Grocers Inc. (SEGR) abruptly postponed its initial public offering shortly before the company had expected to price its shares and begin trading Friday on the New York Stock Exchange.
“The company will continue to evaluate the timing for the proposed offering as market conditions develop,” Southeastern said in a statement late Thursday, a day when it had been reportedly expected price the offering for trading under the symbol “SEGR.”
Southeastern gave no reason for the postponement, but Reuters cited an unnamed source as saying the offering had failed to attract sufficient buyer interest at its $14-to-$16 price range.
The move also came hours after rival grocer Albertsons Cos. (NYSE:ACI) tumbled 13.9% on an analyst downgrade. Kroger (NYSE:KR) also fell 8.7 percent Thursday in sympathy, and both stocks were trading another 1% or so lower Friday heading into the close. (See Albertsons chart below.)
Southeastern’s IPO delay represents the second time the chain – which operates some 400 Winn-Dixie, Bi-Lo, Harveys and other grocery stores in seven Southeast states – has canceled plans to go public. The company previously nixed an IPO in 2014 and ultimately filed for Chapter 11 bankruptcy in 2018.
SEGR’s latest IPO effort had called for creditors who received equity under the Chapter 11 reorganization to sell 8.9 million shares to the public, with another 1.3 million available if demand warranted it. All of the shares would have come from stockholders, and Southeastern wasn’t slated to receive any proceeds from the deal.
The chain had confidentially filed an S-1 with the U.S. Securities and Exchange Commission in October, but made the filing public last week and even amended it as recently as Tuesday.
Southeastern wrote in its amended filing that the COVID-19 pandemic and consumers’ resultant moves to essential businesses like supermarkets had actually “enabled us to solidify our competitive positioning [and] enhance our value proposition.”
For example, the company said it expected final numbers for the fiscal year ended Dec. 30 to show comparable-store sales grew 16.3% to $9.1 billion from $7.8 billion a year earlier.
Southeastern also said final numbers would likely indicate that the chain had earned $343.5 million to $411.5 million in net income for the fiscal year ended Dec. 30. That’s a big turnaround from the $116.2 million net loss SEGR recorded for the fiscal year ended Dec. 25, 2019.
However, grocery-store IPOs haven’t fared well recently. Last June, Albertsons staged a disappointing initial public offering that saw shares price at $16, well below their expected $18-to-$20 range. Albertsons also cut the offering’s size to 50M shares from a planned 65.8M.
Nonetheless, Seeking Alpha contributor Himansh Bishnoi recently argued that ACI “is still cheap right now,” with markets undervaluing its COVID-19 boost. Click here to read his bullish thesis.
