Winn-Dixie Turns Profit in Q3

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Winn-Dixie Turns Profit in Q3

JACKSONVILLE, Fla. -- Winn-Dixie Stores, Inc. yesterday managed a turnaround performance for the third quarter ended April 4, with net income of $17.8 million, driven by higher sales, compared to a loss of $29 million in the prior year period.

The Southeastern chain, which emerged from Chapter 11 bankruptcy in November, said that during the quarter it had continued to progress in the implementation of its turnaround plan. Key highlights included adjusted EBITDA of $46.0 million, representing a significant increase over the prior year; and identical store sales increases of 1.6 percent for the third quarter, and 1.7 percent for the fiscal year-to-date period.

The retailer also said its store remodel program is underway, with seven remodels completed and about 20 in total expected to be finished by the end of the fiscal year, in June. Winn-Dixie said it also plans to remodel 75 stores annually in future fiscal years.

"The improved results we achieved in the third quarter reflect early progress in our multi-year turnaround plan," said Winn-Dixie chairman, c.e.o., and president Peter Lynch in a statement. "We will continue to execute against our five key initiatives: rebuilding trust in our brand, investing capital in our stores, neighborhood marketing, associate training and development, and achieving profitable sales."

Lynch said the chain is encouraged by initial customer reaction to its first group of remodeled stores, particularly the remodel it recently completed in Macclenny, Fla., near Winn-Dixie headquarters in Jacksonville.

"This store has served as a laboratory for some of our most innovative ideas for enhancing the customer shopping experience, including making improvements in the store's configuration, product mix, and placement," Lynch noted, adding that the company will apply lessons learned in Macclenny at other locations.

Winn-Dixie said it now has approximately $573.4 million of liquidity, comprised of $391.7 million of borrowing availability under its credit agreement and $181.7 million of cash and cash equivalents. The company's liquidity increased by $73.8 million from the end of its second fiscal quarter, primarily as a result of cash flow from operations, income tax refunds, and higher borrowing availability, offset by capital expenditures.

Winn-Dixie said the positive sales results in the latest quarter were driven by increases in the average basket, which on an identical store basis rose by 3.6 percent in the third quarter and 3.2 percent year-to-date as compared to the same periods in the prior fiscal year. Transaction counts declined by 2.0 percent and 1.4 percent for the 12-week and 40-week periods, respectively, as compared to the same periods in the prior fiscal year. In the second quarter, the transaction count declined by 1.9 percent.

"We attribute the strong increase in average basket this quarter to our effective merchandising and promotional programs along with enhanced operational execution," Lynch said. "The decline in transaction count is a trend we are addressing through our store remodel program."

Winn-Dixie operates 521 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi.