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NEW YORK - Law firm Wechsler Harwood LLP today announced that a securities class action has been filed on behalf of persons or entities who purchased or otherwise acquired the securities of Jacksonville, Fla.based Winn-Dixie Stores, Inc. between Oct. 9, 2002 and Jan. 29, 2004, inclusive.
The case, Chang v. Winn-Dixie Stores, Inc. et al, 04-CV-103, is pending in the U.S. District Court for the Middle District of Florida against defendants Winn-Dixie and certain of its officers. A copy of the complaint is available from the court or can be viewed on the Wechsler Harwood web site at www.whesq.com.
The complaint alleges that defendants made false and misleading statements concerning its business and financial performance. According to the suit, such representations were materially false and misleading because, unknown to investors, they failed to disclose and/or misrepresented that Winn-Dixie's business operations were mismanaged and burning cash to the point that the company was unable to reduce excess expenses when needed, the company had no strategic vision implemented to enhance shareholder value and so wouldn't be able to sustain dividend payments to shareholders, the company couldn't competitively market its Winn-Dixie product brand, Winn-Dixie was unable to gain a greater market share for its supermarkets; the loss of Canadian Imperial Bank of Commerce ATMs would result in a decrease in sales in the stores that had these machines, and the company recorded the carrying value of its durable assets at inflated levels and maintained inadequate reserves for self-insurance.
On Jan. 30 Winn-Dixie announced net losses from sales and operations for its second quarter of fiscal 2004. The company also announced major new initiatives designed to improve competitive market position and profitability, and announced it had to take an asset impairment charge of $36.4 million and an increase in the self-insurance reserve of $21.4 million. This news shocked the market. Shares of Winn-Dixie dropped 27.8 percent, or $2.53 per share, to close at $6.56 on Jan. 30 on extremely heavy trading volume.