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Winn-Dixie Dropped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Grocer Winn-Dixie (Nasdaq: WINN  ) announced preliminary fiscal 2011 earnings results yesterday -- same-store sales down 0.1%, total sales down 1.4%, and a per-share loss of about $0.54. These results are, as I say, "preliminary" -- but there's nothing tentative about investors' reaction to the news, as Winn-Dixie shares plunged 10% in Tuesday trading.

So what: Why is Winn-Dixie getting whipped for trying to break its news gently and warn investors ahead of time? Well, for one thing Wall Street was expecting only a $0.43-per-share loss. Tuesday's news tells us the damage is about 25% worse than feared.

Now what: It's also unlikely to get better any time soon. A quick scroll through Winn's financials shows that the grocer is unprofitable already and burning cash. Management just confirmed that it will earn nothing this year, and Wall Street has advised you not expect any profits next year, either. Longer-term, the company's expected to eke out 1.5% annual "growth" -- but if the company is losing money now, I shudder to think exactly what it is that will be growing …

Management's set the bar low now. Think Winn-Dixie can turn things around and beat expectations going forward? Add the stock to your Fool Watchlist and find out.

Fool contributor Rich Smith does not own (or short) shares of Winn-Dixie. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 03, 2011, at 12:20 PM, jjillian wrote:

    Am retired from metlife and pfizer so I know all about process,profit, and ingenuity. was there when metlife went from a mutual company to a publicly traded one. Both companies were do'ers not talkers, with talented people everywhere you looked. I now work for winn-dixie part time. This company is very antiquated with very little financial resources. Talented people are at a premium here with very little forward thinking. Most of the folks I work with are really the "salt of the earth" and I wish them all the best. However I do not see winn-dixie snapping out of this dilemma. there just isn't anything there to make them profitable.I have learned that the grocery business is brutal, with small margins, and lots of competition to keep you down.

  • Report this Comment On August 03, 2011, at 3:17 PM, kuvholt2 wrote:

    Your article is well written but analytically flawed, not that there's any analysis or understanding offered. I'd re-write an article for you, but I prefer to pick up more shares of the stock cheap so we'll let everyone think things are bad. Thanks!

  • Report this Comment On August 06, 2011, at 12:10 PM, WTFWD wrote:

    Winn Dixie has such promise when it came out of BK. But it has taken any chance of recovery and continues to sink deeper and deeper. I have been there for over 20 years in management at HDQ and have never seen it worse.

    There are almost twice as many managers, senior managers, directors, v.'s than there were before the BK. Many people have not got raises in a couple of years and the layoffs continue. Earlier this year when hundred of people were laid off and 30 stores closed the Board of Directors had their meeting a nearby resort. Really? Why Peter why? This is just one example of the hundreds of dollars in insane spending that goes on

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