Bloomberg News

Whole Foods Profit Trails Estimates on Slower Sales Growth (1)

February 12, 2014

Whole Foods Market

Whole Foods Market Inc. lowered its forecast for profit excluding certain items to a much as $1.65 a share in fiscal 2014, which ends Sept. 28. Photographer: Victor J. Blue/Bloomberg

Whole Foods Market Inc. (WFM:US), the largest U.S. natural-goods grocer, posted fiscal first-quarter profit that trailed analysts’ estimates and lowered its forecast for the year as sales growth slowed amid increased competition.

Net income (WFM:US) for the 16 weeks ended Jan. 19 rose 8.2 percent to $158 million, or 42 cents a share, from $146 million, or 39 cents, a year earlier, the Austin, Texas-based company said today in a statement. The average of 29 analysts’ estimates compiled by Bloomberg was 44 cents. Sales increased 9.9 percent to $4.24 billion, trailing analysts’ projections.

As Whole Foods expands in smaller cities across the U.S., it’s seeing more competition from natural-food sellers such as Fairway Group Holdings Inc. and Sprouts Farmers Market Inc. (SFM:US) Whole Foods’ new stores also are taking sales from its existing locations, Co-Chief Executive Officer John Mackey said in November. Sales at stores open at least a year rose 5.4 percent in the first quarter, after a 5.9 percent gain in the prior quarter.

Whole Foods lowered its forecast for profit excluding certain items to as much as $1.65 a share in fiscal 2014, which ends Sept. 28. The company previously forecast profit of as much as $1.69 a share, and analysts project $1.68, on average.

Whole Foods fell 6 percent to $52.11 at 4:41 p.m. in New York. The shares (WFM:US) dropped 4.1 percent this year through the close of regular trading, while the Standard & Poor’s 500 Index fell 1.6 percent.

Sales Forecast

The retailer also cut its full-year sales forecast to as much as 12 percent growth, compared with a previous estimate for as much as 13 percent growth.

Aside from the newer rivals, traditional grocery stores are pushing more organic food, as well. Kroger Co. (KR:US), which sells food under the Simple Truth brand, sees a “huge opportunity” to sell more natural and organic items, Chief Executive Officer Rodney McMullen said on a conference call in December. Cincinnati-based Kroger is the largest U.S. grocery-store chain.

Whole Foods is lowering prices to attract more customers. It sells items such as flour, coffee, milk and frozen pizza under its less-expensive 365 Everyday Value brand and is expanding its “value offerings,” Mackey said on a conference call in November.

Whole Foods earlier this month said it bought seven Dominick’s grocery-store leases in the Chicago area from Safeway Inc. (SWY:US) The company sees demand for 1,200 Whole Foods stores in the U.S. long term, Co-CEO Walter Robb said in today’s statement.

It has more than 370 locations in the U.S., Canada and the U.K.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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Companies Mentioned

  • WFM
    (Whole Foods Market Inc)
    • $47.69 USD
    • -0.09
    • -0.19%
  • SFM
    (Sprouts Farmers Market Inc)
    • $31.4 USD
    • -0.03
    • -0.1%
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