Winning in Dixie

Outside the South, Winn-Dixie Stores, Inc., is scarcely known. Seventh in sales among the nation's grocery chains, it ranks well behind such billionaires as A. & P., Safeway and Kroger. But for six straight years Winn-Dixie, with 609 stores in ten Southern states, has topped every large U.S. merchandising firm on a gauge that profit-minded businessmen watch more closely than any other: return on invested capital. In 1962 the chain earned 21% on its capital, almost twice as high a percentage as A. & P.'s. Last fortnight Winn-Dixie, which has increased its dividend for the 20th consecutive year, announced that fiscal 1963 earnings hit $18.3 million, as sales rose 7.6% to $831 million.

Few major corporations have such unusual management. Four brothers, sons of Founder William M. Davis, run Winn-Dixie as a team. James Elsworth Davis, 56, is chairman, and Artemus Darius Davis, 57, president; both maintain modest offices in the company's headquarters at Jacksonville, Fla., where they are known as Mr. J. E. and Mr. A. D. Brother Austin Davis, 52, is executive vice president in Miami, and Tine Davis, 49, has the same title in Montgomery. Each has an equal say in management and draws the same "salary" (one-half percent of pre-tax profits, less $25,000, which amounted to some $163,000 for each in the year just closed). Explains J. E.: "I'm the conservative element, the long-range planner. A. D. is always the aggressive expansionist. Austin specializes in the big stores, and Tine is the personality boy."

"A Lot Different." The brothers follow the business maxims of their late father, who left his sons 35 stores. "Stay liquid, sell for cash, and don't buy real estate," he advised. Instead of owning its stores and warehouses, Winn-Dixie rents them. Drawls A. D. Davis: "Everything we have our money in is turning out dollars for us every 18 or 20 days"--which is the time it takes for Winn-Dixie's inventory to turn over (about 25% faster than the average for supermarkets). With $66 million in working capital on hand, the brothers avoid seasonal borrowing and have paid cash for most of the 13 other grocery chains that they have acquired.

"We spend as much time worrying about costs as we do about sales," says J. E. "With a profit of 1 1/2-c- per dollar of sales, you simply can't waste money." The company has smaller stores than its competitors, fits them with a minimum of expensive equipment. These stores stock prime meats and vegetables, sometimes price them slightly lower than competitors do. Because regional markets vary, Winn-Dixie's divisional managers are free to buy and sell as they please. "This is a hell of a lot different than the A. & P.," says A. D. "There the rules are made at 420 Lexington Avenue, period."

Dividends Every Month. Though they are expansion-minded, the Davises have confined themselves to the South because they feel more comfortable in an area they know well. Racial strife lately has affected their sales, but not badly About 12% of Winn-Dixie's work force, including one manager, is Negro; a few stores have been picketed by Negroes who think that this is not enough, and other stores have been shunned by segregationists who feel that the chain is "knuckling under" to the Negroes. The Davises say that they will never agree to any hiring under pressure.

The company keeps 12,000 employees voting nonunion by means of lavish stock-purchase plans and bonuses for faster work. And it keeps stockholders satisfied with monthly dividend checks (minimum check: 9-c- on a single share). The unique monthly payment system adds $42,000 a year to costs, but Winn-Dixie believes that it helps sales and employee relations. Says J.E.: "Our customers quite often cash their checks in our stores, and when an employee gets a dividend check at the end of each month, man, he's happy." So are the Davises, who predict that sales in the coming year will rise at least 4%.

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