Southeastern Grocers, the parent company of Winn-Dixie, Bi-Lo, Harvey’s and Fresco Y Màs stores, is preparing to enter the trading universe with an upcoming initial public offering (IPO). In fact, the company went so far as to submit a Form S-1 with the U.S. Securities and Exchange Commission, a big step towards the Southeastern Grocers IPO.
The Jacksonville, Florida-based grocer has an interesting story, to say the least. Before you consider investing in the imminent Southeastern Grocers IPO, you should know a few things about the company’s rocky past.
I’ll give you a concise rundown on the not-so-smooth history of Southeastern Grocers. Yet, this doesn’t mean that I’m leaning bullish on this company, which could actually be a growth story in the making.
The IPO market is hot this year, but something tells me that the Southeastern Grocers IPO might get overlooked by many traders. That’s a shame as this under-the-radar company has the potential to provide outstanding value to the shareholders post-IPO.
A Closer Look at the Southeastern Grocers IPO
On Oct. 19, Southeastern Grocers announced that it had officially filed an S-1 registration statement with the U.S. Securities and Exchange Commission. This filing was for a public offering of common stock by certain of the company’s stockholders.
Unfortunately, we don’t yet know how many shares will be issues. Nor do we have a definitive price range for the IPO. So, prospective investors will need to stay tuned for more information on those details.
But hey, at least we have a likely ticker symbol. According to the SEC filing, Southeastern Grocers is looking to use the ticker symbol SEGR for its common stock. Moreover, the company plans for the stock to be listed on the New York Stock Exchange.
Emerging from the Depths
The term “Chapter 11” would usually be enough to dissuade a cautious investor from taking a position in a company. Yet, it might actually be justifiable to make an exception in the case of Southeastern Grocers.
In May of 2018, the U.S. Bankruptcy Court for the District of Delaware approved an amended Chapter 11 reorganization plan for Southeastern Grocers. As scary as this sounds, this event actually enabled the company to finalize its restructuring and emerge from bankruptcy.
This restructuring included a refinancing that would make it possible for Southeastern Grocers to reduce its debt by around $600 million. When the dust settled, Southeastern Grocers would still have more than 575 stores throughout the southeastern U.S.
Naturally, CEO Anthony Hucker welcomed the opportunity to move past this dark chapter in his company’s history. “We’re eager to show our customers how far we’ve come — and how far we’re going — as we emerge from this process,” he said.
A Growing Grocer
So, Southeastern Grocers hit a rough patch a couple of years ago. As the possible IPO approaches, how’s the company doing today?
By all accounts, Southeastern Grocers is doing great. Impressively, the company expects to add around 10 new stores annually. Not only that, but Southeastern Grocers is executing a store-renewal program which, according to the company, yields a sales increase of 10% per store.
Furthermore, it could be said that Southeastern Grocers is a grocery chain in growth mode. I don’t mean this in the obvious sense of adding more stores. Rather, the company is growing into the area of home delivery.
This is a savvy move in a time when the Covid-19 pandemic has forced some people to stay at home. Already, Southeastern Grocers offers home delivery in 365 of its stores.
Personally, I’m hoping that the company will continue to push hard in this direction as home grocery delivery is likely to remain a lucrative business well into 2021.
The Bottom Line
Now that you’ve been given the rundown on the Southeastern Grocers IPO, I recommend that you check back here at InvestorPlace for updates.
If and when Southeastern Grocers is available to the public for trading, an early long-term position could provide surprising returns as this once-troubled company gets back on its feet.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.