JACKSONVILLE, Fla., Jul 27, 2010 — Winn-Dixie Stores, Inc., today announced that it will close 30 non-remodeled, underperforming stores. The Company will also consolidate its four operating regions into three and reduce its workforce at the field and corporate support levels.
Winn-Dixie also reaffirmed its guidance for fiscal 2010, which the Company believes it achieved through effective management of its promotional activity and cost control, despite a deteriorating sales environment in the fourth quarter. Management plans to hold an investor conference call on Tuesday, August 31, 2010, to discuss its financial results for fiscal 2010 and provide guidance for fiscal 2011, including any additional information on the announcement made today.
Winn-Dixie Chairman, CEO, and President, Peter Lynch, said, "We continue to operate in a particularly difficult economic and retail environment in the Southeast. To respond to these business and economic conditions, we have thoroughly reviewed our retail operations and support structure and have decided to exit certain retail locations and reduce our corporate and field support staffs. We sincerely regret the impact this will have on some of our Associates, and we will make every effort to ensure these Associates can pursue other open positions or have a smooth and respectful transition."
In addition to the staffing reductions that will take place as a direct result of the store closures, the Company will eliminate approximately 120 positions in its corporate and field support staffs. The Company expects to achieve annualized savings in the range of $12 to $17 million as a result of these actions, which should begin to be realized after the end of the first quarter of fiscal 2011 due to timing and transition costs. The store closures and position eliminations are expected to be completed by the end of the first quarter of fiscal 2011, which ends on September 22, 2010.
Mr. Lynch continued, "The actions we are taking today will enable us to lower our cost structure, improve efficiency, and build the right foundation for our business now and in the future. With nearly half of our store base already remodeled, and with plans in place for additional remodels and new store openings, we are confident we will continue making significant progress with our 'Fresh & Local' strategy and business initiatives."
A listing of the 30 store locations to be closed will be available on the Company's website beginning July 29, 2010, at www.winndixie.com.
Store Closing Costs
In connection with the actions announced today, the Company expects to incur charges in the range of $35 to $50 million in the first quarter of fiscal 2011. These charges include lease-related items of $30 to $45 million and other charges, including severance, of approximately $5 million. The operating results for the closed stores and the store closing costs are expected to be reported as discontinued operations in the first quarter of fiscal 2011. The Company's definition of Adjusted EBITDA (provided below) excludes discontinued operations. The store closings are subject to any necessary consents or approvals under the Company's Credit Agreement, which the Company currently anticipates it will obtain.
Fiscal 2010 Guidance
The Company also reaffirmed today that it expects to report fiscal 2010 Adjusted EBITDA at the low end of its guidance range of $140 to $160 million, as previously announced.
Source: Winn-Dixie Stores Inc.
