JACKSONVILLE, Fla. — Winn-Dixie Stores last week said it expects to report identical-store sales gains of 3.2% for the fourth quarter, which ended June 29, and ID-sales declines of 0.1% for the full fiscal year.
Those results exceeded analysts' expectations for the quarter, although the stock reacted negatively, and some analysts questioned the impact to the company's margins and profitability.
Winn-Dixie projected EBITDA of about $38 million, slightly below analysts' expectations, “despite a stronger than expected top line,” noted Karen Short, a New York-based analyst with BMO Capital Markets. “This implies sales came at a price. More specifically, a 3.2% comp should have generated EBITDA in the $50 million area (assuming a 28.5% gross margin).”
Scott Mushkin, an analyst with Jefferies & Co., noted that Winn-Dixie's full-year projection for EBITDA of about $114 million was more positive than recent guidance, however, and he also projected better sales trends ahead.
“Our research has suggested steadily improving sales trends at Winn-Dixie, as well as signs of better execution in recent periods,” he said in a research note. “In addition, we believe the company should see a nice lift as it cycles the impact of the Gulf oil spill from last year.”
Cycling the impact of last year's BP oil spill should add about 75 basis points to ID sales, mostly in the current fiscal quarter, Mushkin said.
Winn-Dixie, which is scheduled to report full financial results for the fiscal year on Aug. 29, said it expects net income from continuing operations to be about $5 million for the fourth quarter, vs. $16 million in the year-ago quarter. Sales in the most recent quarter were $1.6 billion, vs. $1.7 billion in the year-ago period, which included an extra week.
For the full year, the company expected to report a net loss from continuing operations of about $30 million, vs. net income from continuing operations of $37 million. Sales for the full year are expected to total $6.9 billion, vs. $7 billion in the preceding year, which also had an extra week.
“We began the year in one of the most difficult environments in years, and by remaining true to our strategy and keenly focused on execution, we were able to strengthen our results significantly during the second half of the year,” said Peter Lynch, chairman, president and chief executive officer.
