Bi-Lo, Winn-Dixie combo would create a $780 million-plus pharmacy operation

GREENVILLE, S.C. — The proposed acquisition of Winn-Dixie by fellow Southeast grocer Bi-Lo would create a regional pharmacy operator with almost 500 pharmacy operations and pharmacy revenue of around $780 million, according to Drug Store News projections.

That would make the Bi-Lo/Winn-Dixie combination No. 24 on Drug Store News' PoweRx50 — a list of the top 50 pharmacy retailers operating in the U.S. — falling in just behind Albertsons LLC (which posted $787 million in pharmacy revenue in 2010) and well ahead of Fred's ($628 million).

And there will be no store closures associated with the mergers, according to both Bi-Lo and Winn-Dixie — the only potential for overlapping markets lay in Georgia, where Winn-Dixie operates 21 stores.

Both chains have come out of bankruptcy over the past decade — Winn-Dixie in 2006 and Bi-Lo more recently in 2010 — during which many of their underperforming operations already had been shuttered.

Today, both Bi-Lo and Winn-Dixie have put into play extensive remodel plans to help foster growth and interest in their respective banners. "We successfully grand-opened two more transformational remodeled stores that are generating promising financial results and building brand equity in their respective markets," Winn-Dixie chairman, president and CEO Peter Lynch told analysts in November, bringing the number of remodeled stores in operation to five.

Winn-Dixie's transformational remodels generate between $400 and $500 in sales per sq. ft. vs. around $300 in sales per sq. ft. in a traditional Winn-Dixie. Already, Winn-Dixie had planned to roll out some of the learnings gleaned from the transformational remodels across its store base under the direction of Larry Appel, SVP retail operations. Appel could play a key role in applying any Winn-Dixie learnings to Bi-Lo's remodel program.

Before the proposed merger, Winn-Dixie had planned to institute its transformational format across 60% of its store base, or 290 stores.