Whole Foods profit hurt by acquisition
Whole Foods Market Inc. said Tuesday that sales surged in the second quarter, but absorbing the Wild Oats chain it bought last year caused profit to sag by 13%.
The retailer of organic and natural foods said net income in the quarter ended April 13 fell to $40 million, or 29 cents per share, from $46 million, or 32 cents per share, a year earlier.
The Austin-based grocer said the acquisition of Wild Oats Markets Inc. cost $8.6 million, or 6 cents per share.
Analysts surveyed by Thomson Financial had predicted a profit of 30 cents per share.
Revenue rose 28% to $1.87 billion from $1.46 billion a year ago, but fell short of analysts’ forecast of $1.89 billion.
Sales at stores open at least a year, a key measure of retailing strength, rose 6.7% but slowed to 5.7% in the first four weeks of the new quarter, which the company blamed on changes in a couple of store locations.
Before the report was issued, Whole Foods (WFMI, Fortune 500) shares fell 11 cents to close at $33.64. In after-hours trading, they dropped $2.84, or 8.4%, to $30.80.
While still growing, Whole Foods in recent years has seen a slowing of its pace, from double-digit gains to quarters like the one just ended, as heavy spending on new stores has weighed on results.
Chairman and Chief Executive John Mackey said the recent quarter was a strong one at the chain’s core stores, and the company will press ahead with its long-term growth plans.
Through the first six months of its fiscal year, the company earned $79.1 million, or 56 cents per share, compared with $99.74 million, or 70 cents per share, a year earlier cash advance loan. Sales gained 29.7% to $4.32 billion from $3.33 billion, and same-store sales increased 8.2%.
The company has changed 27 of the Wild Oats stores over to Whole Foods, and it said sales growth doubled at those locations. It is closing others.
Whole Foods operates about 270 stores and has 89 in development, which are much larger on average than its existing ones.