JACKSONVILLE, Fla. -- Winn-Dixie Stores here said last week it will launch a new TV campaign in the fall to grow its sales base now that its restructuring efforts are virtually completed.
"As we seek to grow sales, we will undertake a new targeted marketing effort," Al Rowland, president and chief executive officer, said. The company has hired a new advertising agency, he added, "and our new TV campaign will be unveiled later this year."
Rowland did not elaborate on the content of the campaign.
Speaking to securities analysts last week in Winn-Dixie's first-ever, quarterly conference call, Rowland said the company has made great progress on its restructuring effort over the last 16 months, "but we have a great deal more to do."
He said shrink, for example, is down considerably, hovering around 3% of sales. "We've reduced shrink by about $100 million on an annualized basis and we're gaining on it every day, and we expect to continue to reduce shrink dramatically," Rowland said.
According to Rick McCook, chief financial officer, Winn-Dixie has completed retrofits at 595 stores since April 2000, with 21 more stores currently undergoing remodeling to add liquor sections. An additional 74 stores have short-term leases, he said, "and we will remodel those stores whose leases we decide to extend and let the leases expire on the rest."
As part of the restructuring, Rowland said Winn-Dixie closed 112 stores, four manufacturing plants and three distribution centers, all of which were underperforming; right-sized the perishables assortments at more than half its store base; centralized procurement, marketing, accounting and real estate; and put a stronger emphasis on customer service.
"We're totally dedicated to delivering excellent customer service," Rowland said. Winn-Dixie has trained personnel at every store to provide first-class service, he said, and it's using mystery shoppers to measure each store's performance. "There are some spots where progress is not happening as it should, and as we identify those stores, we're retraining personnel and holding people responsible," he explained.
"We're not anyplace close to where we will be as a company [in customer service], but we intend to operate the best stores in every neighborhood in terms of the way we treat our customers."
Rowland also said Winn-Dixie has strengthened its management team, with a mix of new executives from outside the company overseeing such areas as real estate, warehousing, performance and reward systems, risk management and general merchandise.
Last week's conference call followed the release of Winn-Dixie's financial results for the year and fourth quarter ended June 27.
For the year, sales declined 5.8% to $12.9 billion, and comparable store sales dropped 4.2%; the company had positive earnings of $45.3 million for the year, compared with a loss last year.
For the 12 weeks, fourth-quarter sales fell 2.3% to $3.0 billion and comps declined 5.0%; earnings were positive at $13.0 million, compared with a loss in the prior year's quarter.
The restructuring resulted in non-recurring, after-tax charges of $543.2 million for the year, including $396 million in the fourth quarter. Excluding those charges, Winn-Dixie said net income rose 85.2% to $139.3 million for the year and 135.6% to $48.3 million for the quarter.
The company said the drop in comps was largely due to elimination of unprofitable sales departments, including salad bars, melon bars, deli/cafes and dry cleaners; elimination of unprofitable sales items in other departments; a reduction in the number of 24-hour stores; and construction disruptions from numerous store retrofits.
McCook said Winn-Dixie anticipates comps will remain negative through the first quarter and be flat during the second, "but we should see positive comps in the third and fourth quarters, and those could be accelerated by the advertising campaign."
