Saturday, January 31, 2004

Winn-Dixie cuts may bring store closings

The Associated Press

JACKSONVILLE, Fla. - Supermarket chain Winn-Dixie Stores Inc., parent of the local Thriftway supermarkets, reported a loss for the latest quarter, suspended its dividend and announced plans to cut $100 million in annual costs that could include store closings.

The announcements Friday came as Standard & Poor's lowered Winn-Dixie's corporate debt rating and said it was reviewing the situation to see if further reductions were warranted.

Winn-Dixie shares tumbled $2.53, or 29 percent, to close at $6.56 on the New York Stock Exchange.

The company that operates a 1,078-store chain in 12 Southeastern states and the Bahamas said Friday that it plans to cut payroll and corporate services, sell money-losing stores and tighten its centralized purchasing.

"We are obviously disappointed in this quarter's results, and we recognize that we cannot continue down this path," said Frank Lazaran, company president and CEO.

Winn-Dixie reported a loss of $79.5 million, or 57 cents a share, for its fiscal second quarter ended Jan. 7 in contrast to a profit of $91.4 million, or 65 cents a share, a year ago.

Sales fell 6 percent to $3.56 billion from $3.79 billion in the same quarter last year.

Sales at stores open at least a year, considered a good measure of retail health, were down 6.8 percent.

The company blamed the loss on its discount programs and tougher competition. An asset-impairment charge of $36.4 million and a $21.4 million increase in the self-insurance reserve added to the quarterly loss.

For the first half of its fiscal year, Winn-Dixie lost $78.3 million, or 56 cents a share, versus a profit of $126 million, or 90 cents a share, a year ago.

Sales fell to $6.23 billion from $6.62 billion a year ago.

The company, founded in 1925, had been paying $28 million in annual dividends.

Lazaran said an image makeover at the store level is continuing. "We need to change the consumer's opinion of Winn-Dixie," he said.

Winn-Dixie has retained brand marketing consultants VML to conduct consumer research and review its business strategies and marketing.

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Winn-Dixie cuts may bring store closings