Winn-Dixie Posts Flat Q3 Net Sales

Winn-Dixie Stores Inc. reported net sales for the 12-week third quarter of fiscal 2011 ended on April 6 of $1.6 billion, essentially flat compared with the year-ago period. Identical-store sales, which exclude stores that opened or closed during the quarter, dipped 0.5 percent for the third quarter of 2011 vs. last year, which the grocer attributed to a decrease in transaction count of 1.7 percent, mitigated by a 1.3 percent increase in basket size.

According to Jacksonville, Fla.-based Winn-Dixie, ID sales were negatively affected by competitive activity and other market factors, although these circumstances were partially offset by inflationary price increases in selected categories, a sales rise in remodeled stores, and favorable results from the company’s computer-generated ordering and fuelperks! rewards initiatives.

Adjusted EBITDA was $55.2 million in the third quarter of fiscal 2011, a rise of $4.1 million from last year.

“Overall, we are pleased with our third-quarter results,” noted Winn-Dixie chairman, CEO and president Peter Lynch. “We strategically managed our promotional activity and merchandising efforts in this inflationary environment to drive improvements in both adjusted EBITDA and gross margin, while still offering good value to our guests. Based on year-to-date performance and positive fourth quarter-to-date identical store sales, we remain on track to achieve our financial guidance for the fiscal year.”

Lynch added that the company’s “transformational format stores” were continuing to deliver solid sales results, thereby “reinforcing our confidence in the long-term financial and brand-building benefits of this program.”

The company reported third-quarter net income of $23.4 million, or 42 cents per diluted share, vs. $20.9 million, or 38 cents per diluted share, for the year-ago period. This includes a net loss of $0.2 million, or 0 cents per diluted share for discontinued operations, compared with a net loss from discontinued operations of $1.2 million, or two cents per diluted share, last year.

Third-quarter 2011 gross profit on sales was $465.8 million, an increase of $3.6 million vs. the year-ago period. As a percentage of net sales, gross margin was 28.7 percent in the third quarter, compared with 28.5 percent last year, an increase of 20 basis points. Winn-Dixie attributed this increase to effective management of its pricing and promotional mix, partially offset by a higher LIFO charge.

Net sales for the 40-week period ended April 6 were $5.3 billion, a decline of $35.7 million from the year-ago period. ID sales for the 40 weeks, which exclude stores that opened or closed during that time, fell 1.1 percent from last year, which Winn-Dixie said was due to a decrease in transaction count of 1.7 percent, partially offset by an increase in basket size of 0.6 percent.

Gross profit on sales for the 40 weeks was $1.5 billion, a drop of $30.7 million from the year-ago period. As a percentage of net sales, gross margin for the 40 weeks was 27.9 percent, vs. 28.3 percent last year, a decrease of 40 basis points. The company explained that this decline was primarily because of a higher LIFO charge and other cost increases, including for inventory shrink.

Adjusted EBITDA for the 40 weeks was $75.7 million vs. $108.3 million for the same period in the prior fiscal year.

Winn-Dixie posted a net loss of $77.4 million, or $1.39 per diluted share, compared with net income of $14.9 million, or 27 cents per diluted share, last year. This includes a net loss from discontinued operations of $42.0 million, or 75 cents per diluted share, vs. a net loss from discontinued operations of $5.8 million, or 11 cents per diluted share, in the year-ago period.

Capital expenditures for fiscal 2011 are now expected to be about $115.0 million, a $17.0 million decrease from the company’s previous estimate, because of the timing of certain expenditures earlier planned to occur in fiscal 2011 that are now expected to take place in fiscal 2012. Two of the 17 previously revealed transformational-format stores are nearing completion, with the groundwork laid for the remaining 15 such stores to be completed in the coming months.

Winn-Dixie operates 484 retail grocery locations with 75 liquor stores and four fuel centers at the retail stores and 379 in-store pharmacies, in Florida, Alabama, Louisiana, Georgia and Mississippi.