WINN-DIXIE REBUILDING IN TEXAS; POSTS LOSS IN YEAR

DAVID GHITELMAN

JACKSONVILLE, Fla. -- Winn-Dixie Stores here took both public and behind-the-scenes steps to shore up its Fort Worth-based Texas division.

Publicly, the company said it has named Waynne Cobb to the new position of division manager. Cobb, who had previously been the company's Orlando, Fla., district manager, succeeds Larry Sadlowski, who held the now-discontinued title of president of the Texas division.

Behind the scenes, the company sent a one-page letter to all its Fort Worth division suppliers and brokers, admonishing them for showing insufficient retail support.

Meanwhile, Winn-Dixie last week released its results for the 12-week fourth quarter and 52-week fiscal year ended June 28. Sales and comparable-store sales were down -- and the company reported losses -- for both the quarter and the year, a development Al Rowland, Winn-Dixie president and chief executive officer, termed "disappointing."

In Texas, both industry observers and the company itself told SN Winn-Dixie faces some particularly tough challenges. Kroger Co., Cincinnati, said in November it had agreed to buy all 74 Winn-Dixie stores in Texas and Oklahoma, but the deal quickly unraveled in June after the Federal Trade Commission voiced its objections to the sale, saying it would reduce competition, especially in the Fort Worth area.

Mickey Clerc, Winn-Dixie spokesman, told SN last week that the Texas division is "in somewhat of a limbo situation" following the aborted sale.

He said the letter to brokers and suppliers was sent to "clarify our status and ask for our fair share of vendor support. There was some confusion in the vendor community as a result of the impending sale. We are in a rebuilding stage in Texas right now."

The letter to vendors began: "Recently, we discovered that our Broker and Supplier Partners (?) are not providing adequate retail support in Winn-Dixie's Fort Worth Division. This situation is simply not acceptable."

Meredith Adler, securities analyst at Lehman Bros., New York, told SN a company official last week said to her that the Texas division could be breaking even by the end of the year.

"Winn-Dixie started out with problems in Texas," she said. "That's why they announced they were putting the stores on the block."

However, she added, the company "has already started restructuring" its Texas operations since the Kroger deal fell through.

The entire company has been involved in a major restructuring since April. It has already consolidated executive and divisional offices, closed 111 stores and terminated approximately 11,000 employees, the company said last week, adding that it is still in the process of retrofitting about 650 stores.

Adler said Winn-Dixie is now "focused on accomplishing the right things. They had a lot of management changes, and they have lowered the cost structure in general.

"The fourth quarter was a transition period. The company did a lot of things that will inevitably benefit future periods, but are not visible yet because of the timing."

Sales for the fiscal year were down 3.1% to $13.7 billion, comparable-store sales decreased 1.9% and the net loss was $228.9 million.For the fourth quarter, sales declined 11.4% to $3.1 billion, comps were down 3.5% and the net loss was $242.4 million.