WEST PALM BEACH, Fla. -- Winn-Dixie Stores said here it believes it can win back some of the market share it has lost over the last few years by expanding its store base and continuing to execute better at store level.
According to Richard McCook, senior vice president and chief financial officer of the Jacksonville, Fla.-based chain, "We lost some market share during three years of restructuring, but now that we've paid off our debts, we intend to put cash flow into new-store growth as we ramp up our expansion program. And we also run far better stores than we used to, and we can still improve on that.
"So with new stores and better execution, we will gain back some of the share we've lost."
McCook made his remarks here at the 2003 Consumer & Industrial Growth Leveraged Finance Conference sponsored by Wachovia Securities, Charlotte, N.C.
In other remarks, McCook said:
Winn-Dixie has approximately 100 stores that meet the demographic profile for conversion to an upscale operation -- similar to the single upscale store it operates in Ponte Vedra, Fla., where annual incomes average $120,000.
The chain plans to increase capital spending by 24% to $235 million next year, compared with about $190 million this year, as it begins investing in new stores and information technology.
IT spending rose by $9 million in the last quarter over the previous year. "We're catching up and trying to leapfrog the competition," McCook noted.
Winn-Dixie will continue to expand the number of fuel centers it operates, and that may possibly lead to a test of a convenience store.
The chain is trading on its historic image as "the beef people" to introduce a new program called Winn-Dixie Certified U.S.D.A. Choice Prestige Beef.
The company is experimenting with a variety of new departments, including kitchen shops; expanded wine and liquor sections; specialty and ethnic foods; and organics and natural foods, "particularly to retain customers at locations where a Whole Foods may be opening up nearby," McCook said. It also plans to roll out Krispy Kreme doughnut sections, which are now at 70 stores, chainwide.
McCook said he's glad the company's three years of restructuring are over. "We want to be a topline growth company, and now that we've paid down $400 million in notes, cash flow can be used to open more stores on a going-forward basis," he said.
"But you need to balance sales growth with profitability. In the last quarter we looked at identical-sales growth of 2%, but we ended up with 1.3%. We could have gotten the 2%, but it was a question of how much we wanted to spend to get it."
As a growth company, Winn-Dixie is no longer focused on dividends, he pointed out. Although the company plans to retain dividend payments, the payout will be much lower than the 50% Winn-Dixie historically paid out, McCook said.
"We knew once we got things going right that we wanted to be a growth company, and you can't be a growth company with a 50% dividend," he declared.
As Winn-Dixie seeks to grow market share, it will rely to a large degree on data provided by its reward card program, which it introduced a year ago in Florida and has rolled it out incrementally to most stores.
