Tags: Winn-Dixie | sales | competition | WINN

Winn-Dixie Struggles with Flat Sales, Competition

By    |   Friday, 07 Oct 2011 02:18 PM

Winn-Dixie Stores (WINN) is a supermarket operator trying to fatten its bottom line despite flat sales and strong competition in its main market, the southern United States.

The Jacksonville, Fla., company has staying power. It entered Chapter 11 bankruptcy in February 2005 and exited with a court-approved reorganization plan in November 2006. But sales have stagnated since then, pressuring profitability. Net sales have hovered near the $7 billion mark for the last four fiscal years in a row.

The company reported a net loss of $70.1 million, or $1.26 per diluted share, in the 12 months ended June 29. The company earned net income of $28.9 million, or 52 cents per diluted share, in the previous fiscal year.

Almost half of the net loss in fiscal 2011 stemmed from $33.9 million in one-time costs related to the closure of 30 underperforming stores.

The company has been shrinking for years. At the end of June, Winn-Dixie had 484 retail grocery stores, 379 in-store pharmacies, and 75 liquor stores in Florida, Alabama, Georgia, Louisiana, and Mississippi. At the end of June 2005, while in bankruptcy, it had 913 stores in nine states and in the Bahamas.

Winn-Dixie management expects adjusted earnings before non-operating expenses of between $120 million and $135 million in fiscal 2012, compared with $114 million in fiscal 2011 and $150.8 million in fiscal 2010.

Winn-Dixie management also expects same-store sales growth of 2.5 percent to 3.5 percent in the current fiscal year. Same-store sales were essentially unchanged in the fiscal year ended June 29, versus the prior fiscal year.

Wall Street has a split view of the grocery retailer. Half of the analysts following Winn-Dixie in late September recommended buying its stock and half had neutral or hold ratings.

Competitive pressure

Winn-Dixie has an array of competitors, few of them larger than Lakeland, Fla. chain Publix, which earned net income of $1.3 billion on sales of $25.1 billion in the fiscal year ended Dec. 25, 2010.

In addition to its size advantage, Publix also has better customer-satisfaction ratings for its in-store pharmacy business.

In an annual study of pharmacy-customer satisfaction, research firm J.D. Power and Associates gave Publix a score of 867, the highest in the supermarket category; Winn-Dixie ranked third with a score of 834.

Winn-Dixie is expected to report first-quarter earnings on Nov. 1.

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Winn-Dixie Stores (WINN) is a supermarket operator trying to fatten its bottom line despite flat sales and strong competition in its main market, the southern United States. The Jacksonville, Fla., company has staying power. It entered Chapter 11 bankruptcy in February...
Winn-Dixie,sales,competition,WINN
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2011-18-07
Friday, 07 Oct 2011 02:18 PM
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