Cheez, did you see WIN (Winn-Dixie) earnings yesterday. The street was expecting a 8-9 cent profit, they lost 57 cents. I think this is one to put on your Watch List. One guy has a $1.00 price target------- I know WMT Super-centers are all the rage but to me they are a big hassle. My local Kash-n-Karry or Winn-Dixie prices are very competitive with Wal-Mart and I don't have to park 2 blocks away.
Winn-Dixie Sock Hammered, Hits 15-Yr Low
Friday January 30, 3:35 pm ET
By Emily Kaiser
CHICAGO (Reuters) - Grocery chain Winn-Dixie Stores Inc. (NYSE:WIN - News) on Friday reported an unexpected quarterly loss and suspended its dividend indefinitely, sending its shares down as much as 30 percent to at least a 15-year low.
ADVERTISEMENTThe dismal results, which come as Winn-Dixie faces intensifying competition driven by Wal-Mart Stores Inc. (NYSE:WMT - News), prompted ratings agency Standard & Poor's to cut its debt rating further into junk territory.
Prudential Equity Group analyst Robert Campagnino lowered his price target on the stock to $1 from $8, saying Winn-Dixie was "in a fight for its life."
The Jacksonville, Florida-based supermarket group announced plans to cut $100 million in costs by July 1 and said it was reviewing each of its markets to determine which deserve further investment and which should be closed or sold.
"Their competitive niche is almost directly head-on with Wal-Mart," said George Ashur, analyst with Fleet Securities who rates the bonds "sell."
Winn-Dixie's stores are concentrated in the U.S. Southeast, where Wal-Mart has been opening dozens of supercenters with full-line grocery stores. It caters to middle- and lower-income consumers, the same customers that Wal-Mart targets.
For the fiscal second quarter ended Jan. 7, Winn-Dixie posted a loss of $79.5 million or 57 cents a share compared with a profit of $91.4 million or 65 cents a share a year earlier. Sales fell 6 percent to $3.56 billion.
Analysts had expected a profit of 8 cents per share, according to Reuters Research, a unit of Reuters Group Plc.
"We are obviously disappointed in this quarter's results and we recognize that we cannot continue down this path," said Frank Lazaran, who took over as president and chief executive last June.
STANDING UP TO WAL-MART
Wal-Mart is the largest U.S. grocer and opens hundreds of supercenters each year. The world's biggest company wields massive buying power, which it uses to drive down costs, heaping pressure on competitors.
"If you are in the grocery business, standing up to Wal-Mart ain't easy, but there are ways to do it," said Kurt Barnard, head of consulting firm Retail Forecasting Group.
The key, Barnard said, is to offer better service and a wider assortment of goods than Wal-Mart does.
Winn-Dixie said it hired a brand marketing consulting firm to help it find a new strategy, and would focus on price, service, convenience and product assortment.
Fleet's Ashur said Winn-Dixie was clearly in a tough position, but had sufficient liquidity to withstand the pressures. He noted that Winn-Dixie restructured its balance sheet recently, and had only one major bond issue outstanding.
However, ratings agency Standard & Poor's cut the debt ratings on Winn-Dixie two notches to 'B', its fifth-highest junk rating, and said it may cut them again. In a statement responding to the S&P downgrade, Winn-Dixie said it had adequate liquidity and cash flow to fund operations.
In October Winn-Dixie abruptly withdrew its financial estimates for fiscal 2004, and on Friday it said it had no plans to reinstate forecasts for the current quarter or the remainder of the year.
The company said it expects to shave $100 million from its annual expenses by July 1 through "better buying practices, reduced internal corporate services, asset sales and reductions in payroll expense." Additional details were not provided.
Winn-Dixie shares were down $2.50 at $6.59 in late-morning trade, making them the biggest decliner on the New York Stock Exchange (News - Websites) . They traded as low as $6.15 earlier in the day. (Additional reporting by Dan Burns) |
