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    Winn-Dixie Reports Sales Increase, Operating Loss in Q3

    JACKSONVILLE, Fla. -- While net sales at Winn-Dixie Stores, Inc. here were up slightly for the third quarter, the bankrupt retailer's cost of sales climbed, contributing to a $22 million operating loss.

    JACKSONVILLE, Fla. -- While net sales at Winn-Dixie Stores, Inc. here were up slightly for the third quarter, the bankrupt retailer's cost of sales climbed, contributing to a $22 million operating loss.

    Winn-Dixie said in documents filed with the Securities and Exchange Commission that its net sales were $1.766 billion, an increase of 3.4 percent compared with the same period last year. For the second consecutive quarter, identical-store sales increased substantially as compared with the same period in the prior fiscal year, rising 6.7 percent for the latest 12-week period. Areas significantly affected by Hurricane Katrina reported substantially greater increases in identical store sales, Winn-Dixie noted.

    The retailer also attributed its sales increase to improved average sale per customer visit, due in part to improved store execution and customer service, the introduction of merchandising initiatives that include pricing and promotional programs, and new marketing initiatives. Winn-Dixie acknowledged that competition remains a key factor that negatively affects its identical-store sales.

    Gross margin also improved slightly during the quarter, due to improved inventory shrink management. As a percentage of sales, gross margin was 26.5 percent for the quarter, compared with 26.3 percent last year.

    Winn-Dixie, which expects to emerge from Chapter 11 bankruptcy protection later this summer, said that while the company has continued to experience operating losses in each quarter of fiscal 2006, the third-quarter results reflect a reduction in the level of operating loss. "Our cash on hand and liquidity have improved since the beginning of the fiscal year," the retailer said.

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