Winn-Dixie's Losses Narrow in Q1

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Winn-Dixie's Losses Narrow in Q1

10/30/2007
JACKSONVILLE, Fla. -- Winn-Dixie Stores, Inc. yesterday reported progress in its turnaround efforts, reporting a smaller loss in the latest reported quarter, and identical same-store sales up a marginal 0.2 percent.

Winn-Dixie said losses in the quarter ended Sept. 19 were $0.8 million, an improvement of $23.8 million over losses of $24.6 million in the year-ago period.

Net sales were $1.6 billion, an increase of 0.7 percent compared to the first quarter of fiscal 2007, the chain said. Gross profits on sales in the first quarter were $446.4 million, an increase of $21.9 million compared to the first quarter of fiscal 2007. As a percentage of sales, gross margin was 27.5 percent in the first quarter compared to 26.4 percent in the same period of fiscal 2007, an increase of 110 basis points.

Winn-Dixie said the improvement in gross margin was due primarily to a planned reduction in promotional activity, and operational improvements that reduced costs at its distribution facilities.

"We are very pleased with our financial progress this quarter, especially improvements in adjusted EBITDA and gross margin, which reflects the operational changes we are making while we continue to execute our long-term turnaround plan," said Winn-Dixie chairman, c.e.o., and president Peter Lynch in a statement. "In addition to the store remodels, we are working to improve our competitive position by enhancing the conditions at all our stores, refining our merchandising and promotional activity, managing costs, training our dedicated associates, and improving customer service."

Adjusted EBITDA was $19.5 million, an increase of $30.6 million from the adjusted EBITDA loss of $11.1 million in the first quarter of fiscal 2007.

Lynch noted that while the grocer is still early in its store remodel program, he's encouraged by the traffic and sales trends in the remodeled stores. The chain is currently on track to remodel 75 stores in fiscal 2008.

Approximately 80 percent of those remodels are expected to be "offensive remodels," which the company defines as stores that currently face direct competition in their operating markets, but do not face new competitive openings in the current fiscal year.

As of the end of the first quarter, the company's 12 offensive remodeled stores had experienced a 15 percent weighted average sales lift after the grand re-opening phase. The sales lift in the offensive remodels resulted from increases in transaction count and basket size of 8.6 percent and 6.1 percent, respectively, Winn-Dixie said.