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JACKSONVILLE, Fla. -- Winn-Dixie Stores here still has a long road ahead in its bankruptcy recovery process, but the retailer made modest strides for its fiscal year ended June 28, cutting its losses to $361 million, a notable improvement from $833 million in the previous year.
Sales for fiscal 2006 reached $7.2 billion, an increase of $0.2 billion, or 2.7 percent, from the previous year, the chain said Friday. Identical- store sales increased 5.9 percent, thanks in part to improved average sales per customer visit, the introduction of merchandising initiatives, and new brand marketing initiatives; in addition, the chain benefited from comparisons to previous performances in areas affected by Hurricane Katrina. (Story continues below.)
Gross profit on sales increased $37.1 million. As a percentage of sales, however, gross margin was 25.9 percent and 26.1 percent for fiscal 2006 and fiscal 2005, respectively. Gross margin declined by 20 basis points, primarily due to more aggressive pricing and promotional programs, and increased warehouse and delivery costs, partially offset by improved shrink results, Winn-Dixie said.
A reduction in vendor allowances and cash discounts accounted for 20 basis points of the decline, primarily because many vendors have shifted from slotting fees to promotional programs that are tied to purchase volumes, Winn-Dixie said.
The company's cash on hand and liquidity have improved since the beginning of the fiscal year, primarily as a result of asset sales and inventory liquidations, which were partially offset by operating losses. Winn-Dixie has in place a court-approved $800 million debtors-in-possession credit facility to supplement its cash flow during the reorganization process.
Of the year ahead, Winn-Dixie sounded some cautious notes. The chain said it expects that identical sales in fiscal 2007 will be positive, but added it doesn't expect to hit the 5.9 percent increase it experienced in 2006.
Tough competition in its marketing areas "remains a key factor that negatively impacts identical stores sales," said the company. Its competitive rebuttal program has mitigated a portion of the impact of competitor store openings.
Winn-Dixie filed its final plan of reorganization on Aug. 9. The company has a confirmation hearing set for Oct. 13, and said it expects to emerge from Chapter 11 as soon as late October. Meanwhile it awaits approval on the plan from its creditors.
As of June 28, 2006, Winn-Dixie operated 539 stores in five Southeastern states and the Bahamas. (The Bahamian stores were sold as of August 2006.)