WINN-DIXIE CHAIRMAN: NO SALE TALKS

ELLIOT ZWIEBACH

JACKSONVILLE, Fla. -- Winn-Dixie Stores here last week responded to ongoing trade rumors by saying it is not negotiating to sell the company.

Securities analysts said they believe the company wants to avoid an acquisition, at least for the short term.

In a prepared statement last week, A. Dano Davis, Winn-Dixie chairman, said, "Because of the many recent rumors to the contrary, I will break from our corporate policy and say that we are not negotiating for the sale of the company, nor have we been. Any rumors to the contrary are false."

A spokesman said Davis made his comment at this time because of industry speculation resulting from the Davis' family decision in July to merge its 42% stake in American Heritage Life Investment Corp. with a subsidiary of Allstate Corp.

Jonathan Ziegler, a San Francisco-based analyst with Salomon Smith Barney, New York, said Winn-Dixie is "an ideal property" for sale, which has resulted in a spate of sellout rumors. "But the Davis family owns 40% of the company, so anything that's done has to be done on a friendly basis, and right now the family isn't feeling the pressure that others have felt to consolidate."

Ziegler said the statement "reflects the company's desire to discount the rumors and an affirmation it wants to remain the way it is."

Chuck Cerankoksy, an analyst with McDonald & Co., Cleveland, said he is willing to take the company at its word. "The statement is a pretty strong indication of what the company is not doing," he told SN last week. "It's possible for things to change over the long term, but when management comes right out and makes that kind of statement, then you can consider it good evidence of what its intentions are, at least for a year or so."

However, Gary Giblen, New York-based managing director of Banc of America Montgomery Securities, San Francisco, said the wording of the statement leaves an opening for interpretation.

"A reasonable person could interpret it to mean that Winn-Dixie doesn't preclude the idea that it is taking an exploratory look at selling or that some exploratory discussions are going on, although there are no specific negotiations yet."

According to Giblen, there are several compelling reasons why Winn-Dixie should sell. "Management has tried virtually every strategy under the sun the last few years without any particular success and without finding a sound business formula.

"Complicating the situation is the fact it doesn't have the deepest management bench, and its most valuable player, Jim Kufeldt [president and chief executive officer] is retiring for medical reasons, and that in itself could be a catalyst to sell."

Davis made his comments in a news release on the company's financial results for the year and fourth quarter ended June 30, which included one week more than in the prior year.

Sales for the year rose 3.8% to $14.1 billion, comparable-store sales increased 3.9% and net income dropped 8% to $182.3 million.

For the 13-week fourth quarter, sales rose 0.9% to $3.5 billion, same-store sales fell 3.9% and earnings rose 66.4% to $56.6 million.

"Our operating results for the quarter improved significantly over the previous year as we continue to reshape our company," Davis said. "Our objective is continued profitable sales growth, with an emphasis on self-service perishable departments and improved expense controls.

"We are making the changes necessary to focus management on improving results. Our commitment is to the long term."

During the year, the company said, it opened or acquired 79 stores averaging 51,100 square feet and closed 59 stores averaging 33,600 square feet, with 64 stores enlarged or remodeled.