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Winn-Dixie closes gap toward quarterly black

BY Michael Johnsen

JACKSONVILLE, Fla. — Operations at Winn-Dixie Stores continued to improve across the second quarter, helping to drive shares up by 11 cents to $6.92 per share in mid-day trading.

“Overall I feel good about our progress this quarter,” Peter Lynch, Winn-Dixie chairman, CEO and president, told analysts Tuesday morning during a conference call. “[We] continued to improve sales through strategic adjustments to our promotional activity.”

Net sales for the second quarter essentially were flat at $2.1 billion, as compared with the same period in the prior fiscal year, the grocer reported. Identical-store sales, which exclude stores that opened or closed during the quarter, fell slightly by 0.3% for the second quarter.

Winn-Dixie’s identical-store sales trend improved by 250 basis points compared with the first quarter of fiscal 2011, and 470 basis points compared with the fourth quarter of fiscal 2010. Those improvements came despite increased competitive activity and a continued mix shift from branded pharmaceutical to generic products, Lynch said. In addition, having the New Orleans Saints play in last year’s Super Bowl, an earlier Lent and Mardi Gras helped boost sales a year ago, Lynch added.

Winn-Dixie reported a net loss of $24 million, or 43 cents per diluted share, compared with net income of $2.1 million, or 4 cents per diluted share, for the same period last year.

The grocer dropped its expected capital expenditures for fiscal 2011 by $26 million to $132 million — a result of pushing 15 of 17 planned “transformational” remodels out to the first half of fiscal 2012. “Our transformational stores continue to exceed our expectations, but we feel it is appropriate to take a bit more time to refine, construct and launch the next set of these stores,” Lynch stated. Presently, the chain’s three transformational stores are generating $475 in sales per sq. ft. versus a chain average of $300 in sales per sq. ft.

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Retail sales increase for seventh straight month

BY Allison Cerra

WASHINGTON — The U.S. Census Bureau on Tuesday reported that retail sales continue on a positive trend, edging up 0.3% for the month of January.

The increase to $381.6 billion marked the seventh consecutive month of gains for retail sales. Total sales for the month were above the year-ago period by 7.8%.

The report also noted that grocery stores experienced a 1.4% increase to nearly $45 million for the month, while health and personal care stores sales rose 0.5% to about $22.3 million.

Although the Census Bureau does not disclose advanced estimates for pharmacies and drug stores, the agency last reported that sales rose to $21 million in December 2010, up from $18.8 million in November 2010.

Commenting on the retail sales results was the National Retail Federation’s president and CEO, Matthew Shay. NRF is releasing its economic forecast for 2011 on Thursday.

“In spite of the economic uncertainties that still exist, consumers are clearly demonstrating their desire to spend on discretionary items once again,” Shay said. “The industry is certainly benefitting from the renewed confidence we’re seeing in shoppers, although sustained growth in 2011 will largely rely on improvement in key economic indicators like employment and housing.”

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Publix, Walgreens deliver highest customer satisfaction scores

BY Michael Johnsen

ANN ARBOR, Mich. — Customer satisfaction as measured by the American Customer Satisfaction Index has not improved since the middle of 2009, and on Tuesday it registered its biggest drop in two years; for fourth quarter 2010, the index fell 0.5% to 75.3.

“Even though the economic recovery has gained a bit more momentum as of late, it remains sluggish,” stated Claes Fornell, founder of the ACSI and author of "The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference." “With low job creation and deteriorating customer satisfaction as tracked by the ACSI, the uncertainty of what will happen to consumer demand is not going away.”

For the most part, consumer angst was driven by dissatisfaction with government services and fuel stations on account of the escalating gas prices, the ACSI reported. In the retail sector, customer satisfaction dropped 1.6% to 75. Gas stations realized a 7.9% drop in satisfaction scores in the wake of a 20% rise in gas prices over the past year, the ACSI noted.

Results for other retail industries are mixed. Higher prices on food and other items dampened satisfaction with supermarkets (down 1.3% to 75) and health and personal care stores (down 1.3% to 77), while continued aggressive discounting kept department and discount stores and specialty retailers trending upward for a third straight year. Both industries improved by 1.3% to 76 and 78, respectively.

Publix — which has led customer satisfaction scores among supermarkets since 1994 — maintained its lead despite a 2% drop to an ACSI score of 84. Whole Foods was next, well behind Publix but coming on strong, gaining 4% to 79; followed closely by Kroger, unchanged at 78. Supervalu slipped below the industry average, falling 4% to 74, and tied with Safeway, which improved 3%. Walmart was at the bottom of the industry, unchanged at 71 for the grocery portion of its business.

“While supermarket chains like Publix thrive on the strength of their customer service, Walmart continues to be a place where people shop because of price,” Fornell said. “Service has a strong impact on customer satisfaction, but low prices coupled with low quality do not.”

Drug store chains led the health and personal care store category, up 3% to an ACSI score of 81. Among the three largest retailers, Walgreens remained in front, unchanged at 77, followed by Rite Aid, down 1% to 75. CVS Caremark satisfaction scores fell 4% to 74, which caused it to fall out of a first-place tie with Walgreens as compared with a year ago, and to hit the bottom of the category.

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