Winn-Dixie drops after weak forecast

Shares of Winn-Dixie Stores Inc. continued to drop on Tuesday, a day after the grocery-store operator posted a wider loss in its first quarter and gave a weak forecast for fiscal 2010.

BMO Capital Markets analyst Karen Short in a note to investors called Winn-Dixie sales a"wild card." She said there is a chance that Winn-Dixie might not meet its lower outlook, suggesting sales at stores open more than a year between a range of a 1 percent decline and a 1 percent rise.

Short said she doesn't see much room for cost cutting or improving gross margins. She noted that EBITDA "is extremely sensitive to the top line."

Winn-Dixie said Monday it would lowered its forecast for fiscal 2010 adjusted EBITDA, also known as earnings before interest, taxes, depreciation and amortization, to between $140 million to $160 million. It previously had expected $170 million to $180 million. The company cited the economy and changes in customer behavior for the revision.

The company closed six stores in the three months ended Sept. 16. Its first-quarter loss widened to $8.1 million, or 15 cents per share, compared with a loss of $2.3 million, or 4 cents per share, a year earlier. Revenue fell 2 percent, to $1.64 billion.

Short has a "Market Perform" rating on the shares. The stock fell $1.28, or 9.6 percent, to $12.05 in late afternoon trading on Tuesday.