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Winn-Dixie Starving to Escape Bankruptcy's Shadow
 Rendering of the Market Street store |
A year after emerging from Chapter 11 bankruptcy, Winn-Dixie is half as large as before. The chain boasts a new image, new store designs and surveys indicating shoppers are happier. Finances show encouraging signs as well — but still have a way to go to live up to the firm’s new slogan, “Getting better all the time.”
In the course of reorganizing the Jacksonville company, CEO Peter Lynch closed 500 stores and began overhauling operations at the remaining 500. Today, renovations are under way at 75 stores, “one of our most important initiatives,” Lynch says. Renovations at Winn-Dixie’s Market Street store in Jacksonville will showcase the company’s strategies. The only grocery store downtown is growing by 4,000 square feet with a new design featuring expanded perishables sections, more precooked meals for busy families and curving, less-crowded center aisles.
The company also reports that both internal surveys and external assessments, such as the American Consumer Satisfaction Index conducted by the University of Michigan, indicate Winn-Dixie is scoring better with shoppers.
Investors, however, have reacted quickly to any sign of weakness. After losing $361.3 million in 2006, the company announced it earned $300.6 million on sales of $7.2 billion in fiscal 2007. Overall sales rose 1%, and same-store revenue increased 1.6%. The good-news fourth-quarter report beat analysts’ estimates but also predicted an expected net loss in 2008. The company cited depreciation and amortization expenses, non-cash stock compensation expenses and other charges related to its turnaround plan. The news sent shares, which had traded above $30 in June and July, below $20.
Karen Short, an analyst who watches Winn-Dixie at Friedman, Billings, Ramsey, says while the market “decimated Winn-Dixie for cloudy guidance and a poorly communicated outlook,” the fourth-quarter results are a sign that earnings are likely to grow in the near term. “We continue to see a significant upside to Winn-Dixie,” she says.
