US retailer Winn-Dixie has reported an increase of USD3.1 million in net sales to USD2.3 million for Q2 ended 7 January 2009. Identical store sales were up 0.2%, positively impacted by approximately 40 basis points due to federal assistance given to communities affected by Hurricane Gustav in the prior quarter. However, identical store sales were impacted negatively by a higher percentage of generic pharmaceutical products sold versus branded products and an increase in private label sales versus branded products.
Winn-Dixie Chairman, CEO, and President Peter Lynch said: "It is clear that consumers remain cautious with their spending, which had an impact this quarter on our identical store sales and on basket size in particular. Our top priority remains offering our customers better quality, service, and value for their shopping dollars. As economic conditions develop, we will remain flexible in our approach as we seek to maintain an appropriate balance between sales and gross margin."
Net income amounted to USD16.1 million, including a USD13.8 million gain (net of tax) from the resolution of the company's insurance claim related to fiscal 2006 hurricanes and a benefit of USD5.6 million (net of tax) from an adjustment in its prior years' self-insurance reserves. Adjusted EBITDA was USD35.5 million, an increase of USD13.9 million from the prior year and gross margin was 28.1%, an increase of approximately 140 basis points.
Lynch added: "We are very pleased with our financial progress this quarter, especially the improvements in gross margin and Adjusted EBITDA, which reflect the continued merchandising and marketing strategies we are using to drive more profitable sales. In recent years, the company's gross margin had declined sequentially in the second quarter, due in part to heavy holiday promotions. Our management team has worked hard to refine our promotional activity in order to deliver margins more in line with the rest of the year. This quarter we built upon the progress made last year and successfully eliminated the sequential decline in our gross margin through a combination of product sales mix, less overall investment in promotional activity and an additional focus on our corporate brands."
