US supermarket operator Winn-Dixie Stores has reported an unexpected net loss for the second quarter, hit by increasing competition in the grocery industry.

The company posted a net loss of US$79.5m, or 57 cents per share, for the second quarter to 7 January, compared to a year-earlier net profit of $91.4m, or 65 cents per share.

Sales for the quarter were $3.6bn, down 6% from the year-ago period. Identical stores sales, which include enlargements and exclude the stores that opened or closed during the period, decreased 6.8% for the quarter. Comparable store sales, which include replacement stores, also fell 6.8% for the quarter, compared with the prior year period.

Winn-Dixie attributed its second-quarter loss to several factors, including the impact of its aggressive pricing programs on gross profit margins and the increasingly competitive environment in the grocery industry. In addition, an asset impairment charge of $36.4m and an increase in the self-insurance reserve of $21.4m added to the loss for the quarter.

“We are obviously disappointed in this quarter’s results and we recognize that we cannot continue down this path,” said CEO Frank Lazaran.

He added that the company had been carrying out a comprehensive review of its entire business model and had decided on a number of new initiatives aimed at improving competitive market position and profitability.

Among the initiatives is an expense reduction plan that will include better buying practices, reduced internal corporate services, asset sales and reductions in payroll expense.

The company also plans to evaluate every market in which it operates based on market share, operating results, competitive positioning, growth potential and other factors, and identify core markets targeted for future investment and growth, and non-core markets to be evaluated for sale or closure.

Winn-Dixie is to continue its image makeover programme, aimed at changing consumers’ opinions of its stores. Ninety-eight stores have already had their image overhauled, while an additional 600 stores are targeted for image makeovers over the next 12 months at a total cost of approximately $165.0m.