09Aug2009

Winn-Dixie’s side of the Story

In its third quarter reported in May, Winn-Dixie reported net income of $16.6 million, up from $15.0 million the year before. Net sales rose by $3.1 million to $1.726 billion. Identical store sales were up by 0.2%, but would have been up by 1.2% if Easter had fallen in the third quarter as it did in 2008. They would have been even 0.7% higher but for the higher percentage of generic versus branded pharmaceutical products sold.

Gross profit in the third quarter was $498.7 million, or 28.9% of sales, compared to $483.1 million, or 28.0% of net sales, the year before. The company had about $661.6 million in liquidity, with no plans to borrow in the year ahead.

Winn-Dixie began a store remodeling program in 2007, and says it is on track to complete remodels of half its stores by the end of fiscal 2010 and substantially all of its stores by the end of fiscal 2013. Stores already remodeled for a year were seeing increases in transaction count and basket size of 4.5% and 5.3% respectively. One-year “offensive remodels” are tracking ahead with a 10% weighted average sales increase so far in 2009. Corporate brand penetration has reached 21.8%, and the company has completed packaging and label redesigns for more than 2,000 of its private label products. Winn-Dixie expects to have substantially all of its 3,000 re-done by the end of this calendar year.

The company said in May that it is raising its adjusted operating cash flow guidance for the year because of a decline in inflation and its ability to maintain higher gross margins. The higher gross margins came from higher sales of perishables, higher store brand sales, more favorable commodity costs and lower fuel costs.

At our press time, Winn- Dixie celebrated the completion of remodels and upgrades to 51 Jacksonville-area stores by launching a new brand position, “Fresh Checked Every Day.” In a press release, Lynch promised “a fresh and local shopping experience, with enhanced customer service.” The company put up a microsite, www. freshcheckedeveryday.com, allowing shoppers to take a virtual store tour and find updates on events, promotions and special offers.