Winn-Dixie Trading Lower Despite Topping Analyst Estimates

Posted Aug 31st 2010 9:00AM by Michael Fowlkes
Filed under: Earnings Reports, Competitive Strategy, Wal-Mart (WMT)

Shares of grocer chain Winn-Dixie (WINN) traded a bit lower in after hours trading, despite the company posting better-than-expected earnings numbers Monday after the close.

Headed into the fiscal fourth quarter report, analysts had been expecting to see earnings of 15 cents per share. Actual earnings easily topped estimates at 25 cents per share. During the same period last year, the company had earnings of 17 cents per share.

Immediately after posting its quarter numbers, WINN shares moved higher, but have sold off a bit a little later to drop 0.9%.

One area of weakness for the company was its same-store sales comparison. Same-store sales fell by 5.2% during the quarter, with Winn-Dixie blaming the decline on "increased competitive activity."

Another weak spot was revenues, which came in slightly below analyst estimates. Revenues for the quarter were up 1.8% to $1.75 billion, but came up a bit short of the $1.77 billion that analysts had been expecting to see.

Gross margins shrank a bit during the quarter, falling from 29.2% to 29.1%. The reason for the drop was an increase in dairy and meat costs.

For the full year, the company had sales of $7.2 billion, down 1.6% from the previous year, and same store sales for the full year were down 2.9%.

Results for the quarter were impacted by aggressive price cuts by Wal-Mart Stores (WMT) and by the poor shape of the economy in the Southeast, where the company had its biggest presence.

The stock has been steadily dropping over the past three months, and is in danger of falling to a new 52-week low if it is not able to rebound during the remainder of the week. It has a 52-week low of $7.80, and last traded at $7.95 in after hours trading.

Here is a three month chart on the stock to see just how the stock has been behaving recently: