Winn-Dixie Stores (NASDAQ: WINN), a grocery chain that competes with Wal-Mart (NYSE: WMT), reported Q4 earnings on Monday after the bell. Shareholders should appreciate the net-income turnaround. The business produced a profit of 17 cents per share, a figure that was one penny ahead of estimates. Winn-Dixie was dealing with a loss of 10 cents per share a year ago.
Same-store sales weren't terribly exciting. They advanced 1.6% (they were driven by the timing of the Easter holiday, it should be noted). Gross margin, however, did increase. And cash flow from operating activities for the twelve-month frame wasn't bad.
The press release indicates that management is betting on a remodel strategy to drive future growth. Remodels can act as catalysts in retail. Consumers sometimes respond positively to a fresh experience. Winn-Dixie also knows the value of higher-margin private-label goods. I like how the company seems to find that aspect of its operations particularly important. In the current economy, corporate brands should be leveraged to the fullest extent possible.
Shares of Winn-Dixie were met with buying interest during yesterday's after-hours session, and I can see why. The company has further work to do in terms of increasing sales, but for the most part, the business appears to be on the right track (for now, at least).
I'd wait for a pullback to try a trade with this one. As The Wall Street Journal points out, the stock went a penny beyond its 52-week high at one point after the report came out. Although not always the case, hitting a 52-week high might mean that the stock has a lot of technical strength. Momentum players may want to watch Winn-Dixie.
Disclosure: I don't own any company mentioned; positions can change without notice.
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