Southeastern Grocers Files For IPO: What Investors Need To Know

Southeastern Grocers announced Thursday its intent to offer 8.9 million shares of its common stock as part of an initial public offering.

IPO Details: Existing Southeastern Grocers stockholders will sell 8.9 million shares to the public at a price between $14 and $16 per share.

The company itself is not selling any shares as part of the offering and will not receive any net proceeds from the IPO process.

Shares will trade on the New York Stock Exchange under the ticker "SEGR."

About Southeastern Grocers: Southeastern Grocers, as the name implies, operates 419 grocery stores across Florida, Georgia, Alabama, Louisiana and Mississippi. The company oversees three supermarket brands: Winn-Dixie, Harveys and Fresco y Mas.

Based on total store count, Southeastern Grocers believes it is the sixth-largest supermarket operator in the U.S. and the second-largest supermarket operator in the five states in which it operates. The majority of sales are derived from in-store activity, and the company offers third-party digital platforms to facilitate online shopping.

The company also operates 140 liquor stores, 231 in-store pharmacies and one centralized specialty pharmacy.

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Southeastern Grocers boasts a loyal customer base, as 7 million loyalty members accounted for more than 85% (excluding pharmacy sales) of total net sales and accounted for around 75% of all transactions in 2019.

Reorganization Strategy: Southeastern Grocers emerged from a bankruptcy filing in May 2018 and worked on a reorganization plan that focused on rejuvenating its store fleet, aligning promotional activity, optimizing product assortments and focusing on loyalty.

The final step of the multiyear transformation strategy was completed in 2020.

In May, the company sold 62 stores throughout the Carolinas and Georgia. In September, the company sold another 23 stores in the same states and management continues to explore strategic options for another 40 stores.

Financial Update: The company noted "significant operational and financial momentum" in its business after executing on its transformation plan.

Some of the key financial metrics include:

Positive comparable store sales for each quarter in fiscal 2019 and 17.8% growth for the 40-week period ended Sept. 30, 2020.

Net loss improved from $468.3 million in fiscal 2016 to a net loss of $116.2 million and net income of positive $235.1 million for the same 40-week period.

Net income (loss) as a percentage of net sales improved from (4.48%) in 2016 to (1.4%) in 2019 and positive 3.18% for the same 40-week period.

Net debt leverage improved from 6.2 times in 2016 to 2.7 times in 2019.