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Winn-Dixie Stores, Inc. raised its full-year adjusted earnings outlook due to higher-than-expected fourth-quarter gross profits and a lower-than-expected accounting charge. The Jacksonville, Fla.-based chain said it now expects its earnings before interest, taxes, depreciation and amortization (EBITDA) for the year to tab $164 million, exceeding the high end of its previous guidance of $152 million, due primarily to higher gross profits achieved in the fourth quarter and a reduction in its estimated annual LIFO charge to $15 million from its previous estimate of $19 million.
The grocer’s updated adjusted EBITDA guidance for fiscal 2009 of $164 million would represent an increase of approximately $62 million vs. the prior year as a result of higher sales and gross profit margins, including $4.4 million due to both the positive sales impact from hurricanes Gustav and Ike and tropical storm Fay, and federal assistance monies provided to the impacted communities. The chain further expects to post approximately $7.4 billion in net sales for fiscal 2009 -- an increase of roughly $86 million vs. the prior fiscal year -- and a 1.2 percent same-stores sales gain with gross margins expected to be approximately 28.5 percent.
“We continue to make excellent progress with our strategic initiatives and expect another good year in fiscal 2010,” said Winn-Dixie chairman, president and CEO Peter Lynch. “We are improving our competitive position through our store remodel program, executing targeted merchandising and marketing activities, and providing better customer service throughout the chain. In addition, we remain focused on managing our cost structure while maximizing the impact of our capital investments. We enter fiscal 2010 as a stronger company, and I am very optimistic about our future success.”
For fiscal 2010, the 515-store retailer expects adjusted EBITDA to be in the range of $170 to $180 million, based on the following expectations: same-store sales will be in the range of 1 percent to 2 percent, slightly higher gross margins than fiscal 2009; and full-year LIFO charges of approximately $10 million.
Fiscal 2010 capital expenditures are expected to be approximately $220 million, with 75 planned store remodels accounting for about $130 million; the additional $90 million is for retail store maintenance, IT systems, backup generators, new stores and logistics. The company said it anticipates no borrowings under its credit facility in fiscal 2010.
Winn-Dixie also said it’s on track to remodel roughly half of its stores by the end of fiscal 2010 and substantially all of its stores by the end of fiscal 2013. Last week, the grocer revealed it had completed remodels and upgrades on 51 of its stores in the Jacksonville area, including locations in north Florida and south Georgia, as part of its Phase II store remodel program. In Phase II, the company will primarily employ a market-by-market strategy, with plans to remodel all of its stores in a market before moving on to help target its advertising efforts and leverage its brand more effectively.