The chain posted a net loss of $399.7 million comparedto $79.5 million for the same period in fiscal 2004.Moreover, sales from continuing operations for thequarter were $3.1 billion, a decrease of 4.7% from thesame quarter last year. Identical store sales fromcontinuing operations decreased 4.9% for the secondquarter as compared to the same period last year.
After the announcement, Winn Dixie's stock plummetedmore than 35%, dropping below its 52-week low of$2.97. At the end of trading on the New York StockExchange on Thursday, February 10, Winn-Dixie stockfell $1.25 to close at $2.25.
President & CEO Peter Lynch attributed the poorshowing to intensifying competition and lacklusterholiday sales. Lynch joined Winn-Dixie in December,replacing Frank Lazaran after the chain's board oustedhim.
Lynch says that he has spent the last two monthsevaluating the chain and visiting more than 50 stores.During that time he concluded that most Winn-Dixielocations need to improve their merchandizing.Moreover, he says that "there is a lack of excitementin the stores."
While much of the chain's losses were a result ofrestructuring ($258 million), income tax charges ($10million) and expenses related to discontinuedoperations ($72.3 million), Winn-Dixie still lost$69.4 million or 50 cents per share, much higher thanthe 11 cents per share loss that analysts hadexpected, according to Thomson First Call.
Nonetheless, Lynch maintains that the brand's downwardspiral can be reversed. "The brand has been tarnished,but it can be fixed," he says.
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