The grocery store chain posted a net loss from continuing operation of $123.6 million during the first quarter of fiscal year 2005 compared to $5.2 million for the same period last year. Moreover, sales declined 3.4% to $2.3 billion.
Winn-Dixie executives point to the chain's asset rationalization efforts as the primary reason for the losses. The company incurred a non-cash restructuring charge of $83.2 million related to the Company's asset rationalization plan, primarily lease termination costs. Additionally, the company suffered a non-cash charge of $88 million for the impairment of goodwill due to the decline in the company's market capitalization.
Out of the 156 stores Winn-Dixie announced that it planed to exit as part of its asset rationalization plan, 47 have been closed and 34 have been sold or subleased, or are under contract for sale or sublease.
In the chain's non-core markets, 32 stores have been sold or subleased, or are under contract for sale or sublease and 21 stores have been closed as part of the asset rationalization plan. In core markets two stores are under contract for sale or sublease and 26 stores have been closed as part of the plan.
Winn-Dixie spokeswoman Joanne Gage tells GSR that the chain does not expect to close any additional stores. "We're sticking to what we announced April 30," she says, referring to the announcement that outlined the asset rationalization plan.
Under the plan, Winn-Dixie will operate a streamlined core of 922 stores across 36 markets in Florida, Alabama, Louisiana, Georgia, and certain areas of North Carolina, South Carolina, Mississippi, andTennessee. The chain said it planed to exit 111 stores in 16 non-core market in the Midwest, Virginia and certain areas of North Carolina and South Carolina.
Winn-Dixie's workforce has been reduced by approximately 4,700 positions. And, the chain expects to cut about 10,000 positions as part of the asset rationalization plan, which is scheduled for completion in April 2005, according to Bennett Nussbaum, the chain's CFO.
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