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JACKSONVILLE, Fla. - Winn-Dixie Stores, Inc. reported a loss for its fiscal second quarter, citing the effect of aggressive pricing programs on profit margins and the increasingly competitive grocery industry. Sales fell 6 percent and gross profit dropped 17 percent.
"We are obviously disappointed in this quarter's results, and we recognize that we cannot continue down this path," president and c.e.o. Frank Lazaran said in a statement Friday.
Lazaran announced a series of steps Winn-Dixie will take as it works to turn things around, including an annual expense reduction of $100 million based on current expense levels.
In addition, Winn-Dixie will review markets in which it operates, target core markets for investment and growth, and identify noncore markets to be evaluated for sale or closure.
In view of the second-quarter results and the expected funding needs for capital expenditures, Winn-Dixie said it will suspend future quarterly dividends indefinitely.
Winn-Dixie, reported a net loss of $79.5 million, or 57 cents a share, for the 16-week period ended Jan. 7, in contrast to net income of $91.4 million, or 65 cents a share, a year earlier.
The results for the latest quarter include an asset-impairment charge of $36.4 million. Based on a review during the quarter, Winn-Dixie concluded that projected cash flows from certain stores were less than the carrying amount of related assets for those stores, and determined that the assets had been impaired.
The latest results also include an increase of $21.4 million in the company's self-insurance reserve related to workers' compensation.
Sales fell to $3.56 billion from $3.79 billion. Identical-store sales, which exclude stores that opened or closed during the period, fell 6.8 percent. Comparable store sales, which include replacement stores, also slipped 6.8 percent.
During the 28-week period ended Jan. 7, Winn-Dixie opened six new stores, closed one, and enlarged or remodeled 131 locations. As of Jan. 7, the company operated 1,078 locations, compared with 1,075 a year earlier.