Winn-Dixie exceeds analyst expectations, long-term objectives ‘on track’
JACKSONVILLE, Fla. Winn-Dixie reported positive third-quarter results Monday, significantly exceeding analyst expectations, though analysts remained conservative around Winn-Dixie’s performance, citing concerns over increased competition in a recession economy.
The company’s longer-term objectives, including its store remodeling program and focus on store brands, are “on track,” Peter Lynch, the grocer’s chairman, CEO and president, reported. And it’s those longer-term objectives — tweaking both the Winn-Dixie shopping experience and its store brand presentation — that Lynch said gives him confidence in the grocer’s continued good performance in spite of market challenges.
“We are now a full two years into the [remodeling] program, and have now completed phase 1, or the test phase, of the remodel program. In phase 1 we selectively remodeled over 120 Winn-Dixie locations in various [market areas] across our entire footprint in all of our formats,” he told analysts during a conference call held Tuesday morning. “In the course of the first phase, we were able to test certain aspects of the program and make refinements where needed.”
As of the end of the third quarter of fiscal 2009, Winn-Dixie had completed 127 store remodels, 74 of which were still within their first year of operation. Of the 74 first-year store remodels, 47 are considered by the company to be offensive remodels. Year-to-date, those 47 stores had a 10% weighted average sales increase compared to the same period in the prior fiscal year, excluding the grand re-opening phase and adjusted for the Easter holiday shift. The sales increase resulted from increases in transaction count and basket size of 4.5% and 5.3%, respectively.
“Regarding sales in the defensive [remodels], they are performing at or better than our expectations, and we feel very good that the money that we’ve invested in these defensive stores have protected our marketshare and prevented these stores from having sales erosions that would not be tolerable,” Lynch said.
Now Winn-Dixie moves into phase 2 of its remodeling program, with plans to remodel roughly half of its stores by the end of fiscal 2010 and substantially all of its stores by the end of fiscal 2013.
The remodel program is also not capital intensive, certainly not exceeding allocations, Winn-Dixie reported. As of April 1, Winn-Dixie had approximately $661.6 million of liquidity, comprised of $484.3 million of borrowing availability under its credit agreement and $177.3 million of cash and cash equivalents. “Based on our strong cash position and our preliminary review of our capital plan for next year, we anticipate that in fiscal 2010 we will again have no borrowings under our credit facility,” Lynch said.
Another positive is the chain’s corporate brand program, which improved to a penetration rate of 21.8%, an increase of 110 basis points compared to the same period in the prior fiscal year. To date, Winn-Dixie has completed packaging and label redesigns for more than 2,000 private label products, and plans to have redesigned substantially all of its line of private label products, which consists of approximately 3,000 items, by the end of calendar year 2009.
Winn-Dixie Stores on Monday reported net income of $16.6 million, or $0.30 per diluted share, for the third quarter of fiscal 2009, up 10.7% from the same period in 2008. The profit well exceeded analyst expectations of $0.12 per share.
Net sales were $1.7 billion, up 0.2%.
NACDS, NCPA seek stimulus funds to build health IT, e-Rx infrastructure
ALEXANDRIA, Va. Just how far will that stimulus money stretch? And is there enough to help hard-pressed retail pharmacies pay the fare to ride the health information technology express?
Those are the questions posed by the chain and independent pharmacy industries as the Obama Administration’s health reform gurus draw up detailed plans for shifting the nation’s health care system to health IT and electronic patient records.
As part of its massive stimulus plan to restore momentum to the U.S. economy, the White House has charged the Department of Health & Human Services with allocating $2 billion — money included in the American Recovery and Reinvestment Act [ARRA] — to spur the use of the new technology by the nation’s antiquated, patchwork health care system. And both the National Association of Chain Drug Stores and National Community Pharmacists Association want some of that stimulus money on behalf of their members.
In a lengthy and pointed letter, NACDS and NCPA are reminding HHS officials of the key role community pharmacies will play in the conversion to electronic prescribing and electronic patient records. As such, note organization representatives, they should be among the health stakeholders in line for some of the $2 billion in funding.
The letter is signed by Kevin Nicholson, VP government affairs for NACDS; and John Coster, SVP government affairs for NCPA.
“We believe that widespread adoption of electronic prescribing is the most critical prerequisite for the adoption of electronic health records,” the two told David Blumenthal, national coordinator of health information technology for HHS. “As the most consumer-accessible health care provider, pharmacy’s critical role should be recognized in the development of an interoperable healthcare delivery system.”
Pharmacies, added NACDS and NCPA, “should be considered a high priority for any grant funding that fosters adoption of HIT.”
In the stimulus bill signed by President Obama, Congress directed Blumenthal’s office to “invest in the infrastructure necessary to allow for and promote the electronic exchange and use of health information,” noted the pharmacy groups in their letter. And among the health care providers included in that infrastructure, added Nicholson and Coster, are pharmacies.
“The pharmacy profession has been on the leading edge of the adoption of health information technology (HIT) for many years. We have been actively involved in fostering the use of technology to improve the quality of patient care and developing standards to allow the growth of HIT in pharmacy practice,” they told Blumenthal. “However, much work remains to be accomplished, including upgrading and expanding pharmacies’ existing electronic health records to meet the requirements of ARRA, and establishing and enhancing pharmacy connectivity with other health care providers, including prescribers.
“Although the Medicare Improvements for Patients and Providers Act and ARRA…already provide prescribers with financial incentives for electronic prescribing, no grant funding exists for pharmacies to enhance their electronic systems to keep pace with prescribers,” NACDS and NCPA point out. “Consequently, we believe that ONC should consider grant funding for pharmacies to enhance their electronic prescription functionality, which would allow pharmacies to upgrade their systems toward interoperable health records.”
The letter’s authors appealed to Blumenthal to give “priority consideration” to funding for “small independent and chain pharmacies that may not have had the resources to connect to the e-prescribing platforms, and may not have the upgrades in technology necessary to connect to various interoperable electronic health record systems.”
Allow e-prescribing of controlled drugs, key senators urge Obama administration
NEW YORK Having the endorsement of 11 senators around an issue that has become a bit of tripping stone for the wholesale adoption of e-prescribing suggests that a more comprehensive rollout of the cost- and time-saving capabilities associated with e-prescribing, and the advancements an overall healthcare information technology e-prescribing adoption will afford, could be just around the corner.
At the very least, allowing controlled substances to be included in e-prescribing protocols removes a pretty significant impediment for the widespread adoption of e-prescribing. So far e-prescribing is in use today in about 18% of doctor’s practices. And it’s a much harder sell for the remaining 82% when they’re being asked to make the investment in e-prescribing software and still also have to keep their prescription pads on hand for controlled substances and to maintain, essentially, two sets of files.
The fact of the matter is you can’t have a seamless HIT infrastructure, including electronic health records, without including controlled substances as part of that medical record. Not enabling doctors and pharmacists to follow patients on pain meds and other controlled medicines as closely as e-health allows is counterintuitive to the whole HIT movement.
Momentum has been building for physician adoption of e-prescribing. Surescripts last month announced that more than 100,000 physicians have jumped aboard the e-prescribing bandwagon, with some 74,000 doctors actively prescribing electronically in 2008 — up 100% versus 2007. If these 11 senators can push this measure through, you can expect that number to ramp up even more quickly.