Winn-Dixie’s Q3 Sales Down, But ‘In Line With’ Expectations

Winn-Dixie Stores, Inc. this week reported net sales for the third quarter of fiscal 2010, a 12-week period ending March 31, 2010, of $1.7 billion, a drop of $40.4 million, or 2.3 percent, from the year-ago period. Identical store sales, excluding stores that opened or closed during the quarter, fell 2.2 percent for the quarter, compared with last year.

The grocer’s 51 remodeled stores, which are still within their first year of operation, experienced a 6.3 percent weighted average sales rise vs. the year-ago period, excluding the grand re-opening phase. Identical-store sales at both remodeled and non-remodeled stores continued to suffer during the quarter from a poor economy and the ongoing mix shift from branded pharmaceutical to generic products.

Gross profit on sales in the third quarter was $479.2 million, a decline of $19.6 million compared to the year-ago period. As a percentage of net sales, gross margin was 28.4 percent in the third quarter, vs. 28.9 percent last year. Winn-Dixie attributed the decrease to cost fluctuations in some product categories, partly offset by reductions in other costs.

Net income in the third quarter, however, was $20.9 million, or 38 cents per diluted share, compared with net income of $16.6 million, or 30 cents per diluted share, last year.

“We are pleased that our results were in line with our expectations, as we continue to navigate through this challenging economic environment,” said Winn-Dixie chairman, CEO and president Peter Lynch. “Although the pace of the economic recovery remains uncertain, we will continue to focus on balancing sales and gross margin with unique merchandising and marketing programs that are tailored to meet the shopping needs of our customers.”

Lynch noted that “[b]y effectively managing our promotional activity, and exercising discipline with respect to our overall expenses and capital spending, we remain on track to meet our financial guidance for the year.”

Net sales for the 40-week period were $5.5 billion, a decrease of $149.2 million, from the year-ago period. Identical store sales fell 2.3 percent from last year. Winn-Dixie’s 51 remodeled stores saw a 6.0 percent weighted average sales increase over the year-ago period.

Gross profit on sales came to $1.6 billion, a drop of $40.1 million from last year. As a percentage of net sales, gross margin was 28.3 percent, which was flat compared with the same period in the year-ago period.

Net income was $14.9 million, or 27 cents per diluted share, compared with net income of $30.4 million, or 56 cents per diluted share last year. The company attributed the decline net income primarily to a non-recurring gain on an insurance settlement of $22.4 million ($13.8 million net of tax, or 25 cents per diluted share) in the second quarter of fiscal 2009.

Jacksonville, Fla.-based Winn-Dixie Stores, Inc. operates 515 stores, including more than 400 in-store pharmacies, in Florida, Alabama, Louisiana, Georgia, and Mississippi.
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