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.
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.
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