JACKSONVILLE, Fla. -- Winn-Dixie Stores said last week it is lowering its guidance for the fourth quarter ending June 25, but not cutting back on plans to add new stores.
The company said it expects its identical-store sales to decline by 3% to 4% in the fourth quarter, and anticipates reporting earnings of $39 million to $44 million, or 28 cents to 31 cents per share, down from its previous estimate of $49 million to $55 million, or 35 cents to 39 cents per share.
During a conference call with analysts to discuss the revised guidance, Frank Lazaran, currently Winn-Dixie's executive vice president and chief operating officer and soon-to-be president and chief executive officer before the next fiscal year starts on June 26, said the factors that adversely affected the stores were the weak economy, the decline in tourism, the deployment of troops to Iraq from bases in Florida, and the competitive situation.
However, Lazaran said the earnings shortfall will not lead to the company cutting back investments. "We will remain aggressive with advertising and promotional spending," he said. "New-store growth will help solidify our position in core markets."
The company restated its previously announced goal of opening at least 60 stores a year. Rick McCook, Winn-Dixie's senior vice president and COO, told the analysts, "Right now, we're not really restricted in the amount of capital we have for the new-store program. We'd like to be opening close to 60 new stores a year. We're not finding enough locations out there to build the 60, and that's because the developers aren't out there in a weak economy building a whole lot of shopping centers."
McCook noted that the company is looking to buy closed stores from retailers in other formats to convert them to Winn-Dixie supermarkets, but added that it is shopping on a store-by-store basis and not looking to acquire another chain.
The company also said Al Rowland, who is retiring as Winn-Dixie's president and CEO before June 26, will in accordance with his contract receive $7.7 million -- approximately $6.1 million in cash and the rest in stock and stock options.
In addition, the company said it has negotiated a final settlement with the Internal Revenue Service related to Winn-Dixie's company-owned life insurance tax liability. The settlement calls for Winn-Dixie, which paid the IRS $52 million in 2002 as part of this liability, to pay no additional amounts, with the result that money the company had been holding in reserve for future liability payments will be treated as a reduction of income-tax expense and is expected to increase net earnings by $28 million.