US retailer Winn-Dixie saw net losses in its fiscal first quarter widen as a result of increasing operating costs and expenses for store remodelling.

For the 12 weeks ended 17 September, the company posted a net loss of US$2.3m, compared to a loss of $0.8m in the first quarter of fiscal 2008.

The Jacksonville-based company reported an increase of 3.4% in net sales to $1.7bn, an increase of $55m.

Identical-store sales increased 3% as a result of Hurricanes Gustav and Ike and Tropical Storm Fay. The company said it benefited from pre-storm purchases and its ability to reopen stores before competitors. This benefit was partially offset by sales losses during temporary closures.

Gross profit on sales in the first quarter was $466.8m, an increase of $20.4m compared to the same period in the prior fiscal year, attributable to product mix changes and operational improvements.

"Although the economic conditions remain challenging, we are continuing to provide our customers with better quality and value every time they visit their local Winn-Dixie," said Peter Lynch, chairman, CEO and president of Winn-Dixie. "Over the longer term, we are pursuing sustainable sales growth and building customer loyalty through initiatives such as our store remodel and corporate brands programmes and our neighbourhood merchandising and marketing strategy."

The company said it plans to remodel roughly half the chain by the end of fiscal 2010 and substantially all of its stores by the end of fiscal 2013.