Winn Reports $903,000 Loss in 3rd Quarter : Firm Still Seeking Food Industry Niche

Still struggling to find its niche in the specialty foods industry, Winn Enterprises reported net losses of $903,000 for the third quarter. In the 1983 third quarter, Winn had profits of $435,000.

The third-quarter loss is a setback for the Fullerton-based specialty foods and savings and loan company, which just one month ago announced its intention to purchase a major East Coast housing developer. Negotiations for that $125-million acquisition are continuing. Winn, a former real estate investment company, has been struggling to redirect itself as a major force in the food industry since its 1983 purchase of Knudsen Corp., the state’s largest dairy-products firm.

Recent price-cutting in the dairy industry by competitors such as Carnation Co. and Jerseymaid Milk Products Inc. has forced Knudsen to squeeze margins. “Everyone’s cutting prices to get market share,” said Scott Gillespie, general manager at First Wilshire Securities Management Inc. of Los Angeles.

“I’m still bullish on Winn’s long-term outlook,” said Gillespie, “but this certainly is not good news,” he said of the company’s losses.

Ted D. Nelson, chairman and chief executive of Winn, said the losses were temporary. “Basically, my impression of the industry is that these types of situations occur and last a short period and then go away,” he said. Although he would not forecast fourth-quarter results, he did say, “I’m optimistic.”

Extraordinary Losses

The disappointing third-quarter results included $537,000 in operating losses, and an extraordinary loss of $366,000. For the three-month period ended Dec. 31, 1984, the company also reported record revenues of $129 million, compared to $127 million during the same period the year before.

Winn’s income from continuing operations for the nine-month period dropped nearly 70%, to $344,000 in 1984, compared to $1.1 million in 1983. At the same time, nine-month revenues climbed more than 32% to a record $408 million in 1984, compared to $309 million in 1983.

Beside the recent losses at Knudsen, Winn has grappled with other problems in trying to become a food-industry giant. Shortly after Winn announced its intentions in early 1984 to acquired Kern Foods--another specialty foods company--it backed out and blamed Kern for not complying with the purchase agreement.

Big Customers Lost, Gained

Adding to Winn’s third-quarter woes was Knudsen’s loss of a major chain supermarket customer, said a company spokesman. At the same time, however, the company recently picked up an even larger supermarket customer, the spokesman said.