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Winn-Dixie Reports $153 Million Loss in 1Q; Says Strategic Initiatives 'On Track'

JACKSONVILLE, Fla. - Shares at Winn-Dixie Stores, Inc. here plunged nearly 12 percent yesterday as the retailer posted a net loss of $153 million, or $1.09 per share, for the first quarter of its 2005 fiscal year, compared to net earnings of $5.2 million, or 4 cents per share, during the first quarter of fiscal 2004. The company incurred costs from closing stores and distribution facilities.

During its first quarter, which ended Sept. 22, sales from continuing operations were $2.3 billion, a decrease of 3.4 percent from the same quarter last year. Identical store sales, which include enlargements and exclude stores that opened or closed during the period, decreased 3.8 percent, Winn-Dixie said. Comparable store sales, which include replacement stores, were down 3.7 percent for the quarter.

The results included a substantially non-cash restructuring charge of $83.2 million, related to the company's asset rationalization plan, as well as a non-cash charge of $88.0 million, related primarily to the impairment of goodwill.

Winn-Dixie incurred a net loss from discontinued operations of $29.5 million, or $0.21 per diluted share. Including discontinued operations, the company reported a net loss of $153.1 million.

"As with any turnaround that involves asset rationalization, our near-term bottom line continues to be impacted by restructuring charges, which were substantially non-cash and within the range we provided earlier this year, as well as non-cash asset impairment charges," said president and c.e.o. Frank Lazaran in a statement. "Operationally, however, we improved margins sequentially for the third consecutive quarter, our initiatives to improve Winn-Dixie's operational performance and competitive position are on track, and our cash position and total liquidity remain stable."

Of the 156 stores Winn-Dixie plans to exit as part of its asset rationalization plan, 47 have been closed and 34 have been sold or subleased, or are under firm contract for sale or sublease, the company said.

As previously announced, Winn-Dixie has closed its Raleigh (North Carolina) and Sarasota (Florida) distribution facilities. The company expects to sell or close its Louisville (Kentucky) facility during the second quarter of fiscal 2005.

As a result of the asset rationalization plan, Winn-Dixie's workforce has been reduced by approximately 4,700 positions.

Winn-Dixie has completed store upgrades in 28 of the 92 targeted stores in its Miami-Ft. Lauderdale lead market at a total cost of approximately $16 million. The Company expects to have a total of 60-65 store upgrades completed by the Thanksgiving holiday and to complete the full 92- store lead market store upgrade program by March 2005. The total cost of the lead market initiative, including capital expenditures, training, store resets and other costs, is expected to range from $50 to $60 million and is expected to be incurred by March 2005.

So far, the upgraded stores are performing notably better than other stores, according to Lazaran.
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