Cookies crumbled, milk spilled, and all the eggs fell out of the basket Friday for Winn-Dixie (NYSE: WIN ) . The grocery retailer reported a nasty, unexpected fourth-quarter loss, shelved its dividend, and had its debt rating downgraded into the junk range by S&P. Its stock took a huge tumble, hitting bottom to reach a brand-new 52-week low.
Winn-Dixie's unappetizing fiscal second quarter yielded a loss of $79.5 million, or $0.57 per share, as compared to a profit of $91.4 million, or $0.65 a share, in the year-ago quarter. Analysts were expecting a profit of $0.08 per share. Sales were down 6%, at $3.6 billion, while same-store sales fell 6.8% based on competition.
A hint of the trouble to come was evidenced in October, when the supermarket company shelved its financial forecasts, with no plans to reinstate them as of yet. The only glimmer of good news is that the company said it still has enough liquidity and cash flow to fund ongoing operations.
It's no secret that supermarket retailers are struggling, as Fool Rick Munarriz said in November. High on the shopping list of concerns are Wal-Mart's (NYSE: WMT ) discount SuperCenters moving into your town, my town, and everybody's town; as well as the bulk-price appeal of warehouse companies such as Costco (Nasdaq: COST ) and BJ'sWholesale (NYSE: BJ ) .
However, during its conference call (transcript courtesy of CCBN StreetEvents), the company cited increased competition not only from the entities above and other traditional grocers such as Kroger (NYSE: KR ) and Albertson's (NYSE: ABS ) , but also from dollar stores such as Family Dollar (NYSE: FDO ) and drugstores like Walgreen (NYSE: WAG ) , making one wonder if Winn-Dixie was dead last on shoppers' lists. President Frank Lazaran also said, among other things, "This company needs to change." And how. So, what next?
In the call, the company described five ways it plans to get its business back in gear, including work on its brand, cost cutting, market analysis and asset rationalization review, a program to spiff up the image of its stores, and a reengineering of its processes. Saving $100 million every year may require some store closings.
Of course, yes to all these things, including recreating itself as a store where people really want to shop again. Whether success will come this year, two years from now, or never remains to be seen. Turnarounds can happen, but right now Winn-Dixie hardly seems a winning proposition.
Is Wal-Mart walloping Winn-Dixie? Do you think you know why? Talk about the discount giant's competitive muscle with other Fools on the Wal-Mart discussion board.
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