Reorganization Items Lift Winn-Dixie Quarterly Income

JACKSONVILLE, Fla. -- In its first quarterly financial results since exiting Chapter 11 bankruptcy protection, Winn-Dixie Stores here yesterday reported net earnings of $286.8 million on sales of $2.2 billion for the 16-week second quarter, which ended Jan. 10. Earnings were boosted by non-cash gains of more than $338 million in reorganization items, including $188.2 million in discharged liabilities and 144.8 million related to “fresh start” accounting. The retailer lost $69.1 million excluding taxes and reorganization gains. Overall sales were down 0.5% in the quarter but up 1.8% year-to-date. The quarterly sales decrease related to stores affected by hurricanes Katrina and Wilma lapping extraordinary gains a year ago and showing identical-store decreases of 6.7%, said Peter Lynch, president and chief executive officer, in a conference call. Excluding hurricane-affected stores, identical-store sales increased by 3.5%. “We believe this sales trend compares quite favorably to many of our competitors,” Lynch said, adding that he expected positive identical-store sales through the end of fiscal year. Basket size increased by 1.3% and 3% during the quarter and year, respectively, Lynch added, while the total number of transactions decreased in both periods. This illustrates better customer service and merchandising in stores, amid increasing competition, he said. -- Jon Springer