Whole Foods profit falls 27%
Profits at natural foods grocer Whole Foods Market fell 27% to $39.1 million in the most recent quarter as the cost of its acquisition of Wild Oats dragged on earnings.
The Austin-based chain reported Tuesday that it earned 28 cents per share in its first quarter, which ended Jan. 20. That compares with $53.8 million, or 38 cents per share, in the same period last year.
The company has routinely posted double-digit profit gains for years. But in recent quarters, earnings have been weighed down by the cost of opening new stores and an expensive legal fight to acquire rival Wild Oats Markets, a deal that closed in August.
Excluding the effect of the Wild Oats purchase, net income was $51 million, or 36 cents per share - in line with the expectations of analysts surveyed by Thomson Financial.
Sales reached $2.46 billion for the quarter, up 32% from a year ago. Sales at stores open at least a year - an indicator of sales trends in retail businesses - were up 7%.
Whole Foods closed its $565 million purchase of Boulder, Colo.-based Wild Oats after an unusually public fight with antitrust regulators at the Federal Trade Commission.
The FTC lost a court bid to block the deal on grounds it would cause prices of natural foods to rise. The agency is appealing the case in the federal appellate court in Washington.
Whole Foods closed 12 Wild Oats in the first quarter, one of which will be reopened in May. All of the Wild Oats stores should be rebranded by the end of the year, and the integration is going better than expected, Chairman and Chief Executive John Mackey said.
He said sales at the supermarkets, which offer more expensive and boutique items, should remain strong, despite the slowing economy because of the loyal customer base.
The company expects total sales to grow 25% to 30% for the year, with comparable stores growing 7.5% to 9.5%.
Shares of Whole Foods fell 80 cents, or 2%, to close at $38.32 before the results were released. They lost another 5 cents in after-hours trading.
Filed under: finance by Forest