US grocer Winn-Dixie Stores has posted an increase in net income during its third quarter, reporting an improvement in gross margins.

The regional grocer yesterday (16 May) booked an 11.9% increase in net income to reach US$23.4m during the quarter ended 6 April.

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Gross profit margin improved to 28.7%, compared to 28.5% in the third quarter of 2010. The retailer attributed the gain to its “effective” management of pricing and promotional mix, although this was partially offset by a higher LIFO charge.

Sales were flat on the previous year at $1.6bn, although identical-store sales fell 0.5%, which the company attributed to a 1.7% decline in the number of transactions. Identical-store sales were also affected by competitive actvity, which the company said were partially offset by price increases.

However, for the first nine months of its financial year, Winn-Dixie posted a $77.4m net loss, against a $14.9m net profit for the same period in the prior year.

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The retailer attributed the losses to a $42m net loss from discontinued operations. For its continuing operations, it posted a $35.4m net profit, which it said includes deferred tax expenses of $11.5m, due to an increase in its valuation allowance on its deferred tax assets.

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Sales over the period were flat at $5.3bn. Identical-store sales were down 1.1%.

Winn-Dixie’s chairman and CEO Peter Lynch said: “Overall, we are pleased with our third-quarter results. We strategically managed our promotional activity and merchandising efforts in this inflationary environment to drive improvements in both Adjusted EBITDA and gross margin, while still offering good value to our guests.”