Winn-Dixie Says It Won't 'Over-Invest' In Price Cuts
By Paul Ziobro, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Winn-Dixie Stores Inc. (WINN) won't broadly cut prices
in a declining economy even as competitors threaten to get more competitive on
pricing.
"We will not over-invest in price simply to chase sales," Winn-Dixie's
Chairman and Chief Executive Peter Lynch said Tuesday on the company's fiscal
first-quarter earnings call.
Winn-Dixie instead will focus on fine-tuning its promotional message on its
circulars, a strategy Lynch said has become paramount in attracting customers in
its markets.
"This is not an environment here in the Southeast that's a price war," Winn-
Dixie's Chairman and Chief Executive Peter Lynch said. "This is war of
promotional pricing on the front page of the ad."
The comments come as Wal-Mart Stores Inc. (WMT) looms as a more aggressive
competitor in the grocery store business, while the privately held Publix Super
Markets Inc. is also stepping up competition in some core Winn-Dixie markets.
Prospects of a pricing war have weighed on the grocery sector throughout the
year.
Winn-Dixie shares were recently down $1.20, or 9%, at $12.15, after the
supermarket operator on Monday reported a wider first-quarter loss than analysts
expected. The company also cut its fiscal-year outlook for adjusted earnings
before interest, taxes, depreciation and amortization, as weak consumer spending
puts pressure on the grocery-store business.
Identical-store sales fell 1.5% in the latest quarter, and the company said
the declines have widened in its current quarter on greater pressure from
deflation, and as consumers spend less per shopping trip.
The company said boosting sales over the next several quarters will remain
challenging as unemployment persists. Deflation in food prices is also expected
to hurt sales during the early half of the current fiscal year, although the
company expects that to abate next year.
-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; paul.ziobro@dowjones.com
(END) Dow Jones Newswires
10-27-091029ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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