Supermarkets have had a tough time amid the sluggish recovery, as consumers shifted their grocery shopping to discount stores like Wal-Mart, Target and Costco.
And Winn-Dixie has found it especially difficult competing in the price wars, said Jefferies & Co. analyst Scott Mushkin. Winn-Dixie already operates with such a narrow profit margin that lowering prices would hurt its bottom line even more.
Furthermore, the drop in tourism following the BP Gulf oil disaster also dinged the business of the Jacksonville, Fla.-based company, which operates more than 500 stores throughout Florida, Alabama, Louisiana, Georgia, and Mississippi.
In August, Winn-Dixie said same-store sales sank 5.2% during the three months ended June 30, and gave a modest forecast for fiscal 2011, which disappointed investors.
As price competition remains intense and the economy recovers at a snail's pace, Mushkin said Winn-Dixie will likely face more pain in the coming months.
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