Supermarket giant Winn-Dixie Stores Inc. (WIN) swung to a loss in the fourth quarter from a profit a year ago as it incurred costs from closing stores and distribution facilities.

The results, announced Thursday, however, were better than Wall Street expected.

Winn-Dixie, which has been struggling to stay competitive with Wal-Mart Stores Inc. (WMT) and other food rivals such as Publix, reported a loss of $22.72 million, or 16 cents per share, in the three months ended June 30. That compares with a profit of $62.5 million, or 44 cents per share, in the year-ago period.

The results included $7.3 million of restructuring and asset impairment charges related to the company's strategic initiatives and $55.5 million of other asset impairment charges. That resulted in a per-share reduction of 5 cents.

Excluding the charges, the company earned $2.1 million, or a penny per share in the quarter.

Analysts surveyed by Thomson First Call expected a loss of five cents.

For the year, Winn-Dixie lost $100.4 million, or 71 cents per share, compared with a profit of $239.2 million, or $1.70 per share a year ago.

"Clearly, 2004 was a difficult year for Winn-Dixie," said Frank Lazaran, president and chief executive officer.

Sales reached $10.6 billion, up from $11.03 billion a year ago.

"They are still on thin ice, but it doesn't seem the ice is cracking," said analyst Jason Whitmer of FTN Midwest Research in Cleveland. "They are in a decent position to hang on for the time being."

As part of its plan to turn the company around, Winn-Dixie plans to makeover 92 stores into a new neighborhood market concept in Miami and Ft. Lauderdale, Lazaran said.

The new initiative includes improving in-store customer services, an image makeover program and a new brand positioning program.

The company is introducing new product offerings to enhance its delis and bakeries. In addition, there are new training, recruiting and performance management initiatives.

Winn-Dixie has completed eight of the store makeovers and expects to complete another 10 stores by the end of August and all 92 stores in South Florida by March at a cost of $50 million to $60 million.

Whitmer said he doesn't know if Winn-Dixie has the resources to makeover its image.

"They are working against years and years of perception that they are an old, tired and dirty chain. It's hard to break that perception."

While making over stores in South Florida, Winn-Dixie has been busy closing stores and distribution centers.

Earlier this year, the company said it planned to close 45 unprofitable or poorly located stores and put 111 stores up for sale and close them if they could not find a buyer. In addition, 10,000 employees will be cut from their payroll.

Jon Springer with Supermarket News (search) said Thursday that Winn-Dixie continues to be under competitive pressure from Publix and Wal-Mart Supercenters.

"They are exiting places where they were outflanked. Wal-Mart is one of the big killers there," Springer said. "Generally, Winn-Dixie has had a lot of trouble."

So far, the company has closed or sold 32 stores, and expects to shutter another 124 stores by the end of April 2005.

In addition, the company has closed its distribution centers in Raleigh, N.C., and Sarasota, Fla., and expects to sell its Louisville, Ky., facility during the first half of fiscal 2005.

Winn-Dixie officials said they are in talks to sell its Dixie Packers (search), Crackin' Good Bakers (search), Crackin' Good Snacks (search) and Montgomery Pizza (search) and plans to exit those by the end of April.

Lazaran also spoke briefly about the damage from Hurricane Charley. While the company is still totaling losses from perishable items and lost sales, the total will be greater than its $10 million insurance deductible.

The Jacksonville-based supermarket chain has about 920 stores and some 90,000 employees.

Shares of Winn-Dixie were up 5 cents, reaching $6.44 on the New York Stock Exchange (search).