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Merrill Downgrades Winn-Dixie to 'Sell'


Merrill Lynch downgraded Winn-Dixie (WIN) to sell from neutral.

Analyst Mark Husson says the 28 cents fourth-quarter earnings per share (including discontinued operations) is a penny above his estinmate, but the 5.5% fall in same-store sales is far worse. He also says the guidance for breakeven first-quarter results, and the $1.00-$1.10 fiscal 2004 (June) earnings per share are both about 20 cents worse than his estimates.

He notes most other food retailers' sales and estimates have stabilized or improved while Winn-Dixie is still tumbling. He says the 5.5% same-store sales fall indicates Winn-Dixie has misread the competitive environment as competitors like Kroger and Albertson's have closed the gap on pricing with Wal-Mart.

Husson cut the $1.30 fiscal 2004 earnings per share estimate to 90 cents, and cut the $1.55 fiscal 2005 estimate to $1.10.


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