Aug. 3 statement.

Whole Foods Market, Inc.’s quarterly sales fell short of expectations and the company expressed caution over its outlook for the next year, a signal the economy’s struggles are reaching even the strongest food retailers.
Comparable-store sales during the three months ended July 4 rose 8.8%, Whole Foods said in an  Aug. 3 statement. While that’s better than most major U.S. supermarket chains this year, analysts were expecting sales growth closer to 9%.
For Whole Foods’ fiscal 2011, which begins in October, comparable-store sales are projected to rise 5% to 7%, compared with 6.6% to 6.8% growth in 2010, the company said.
“This guidance appropriately reflects a tempering of our enthusiasm over current sales growth trends with conservatism due to the competitive environment and the economy,” Walter Robb, Whole Foods’ co-chief executive officer, said during a conference call on the financial report.
Shares of Austin, Tex.-based Whole Foods sank as much as 8.2% Aug. 4 amid concern the organic and “natural” food retailer’s prospects are dimming amid persistently high unemployment and consumer belt-tightening.
Whole Foods’ results “suggest that the competitive environment is getting incrementally more challenging,” Ajay Jain, a senior analyst with Hapoalim Securities, said in an Aug. 3 report, in which he reiterated his “sell” rating on the company’s shares.
The company “is obviously not immune from macro headwinds affecting an increasingly wide range of consumer staples and discretionary stocks,” Jain said of Whole Foods.
Over the past year, specialty grocers such as Whole Foods had performed better than their larger, traditional supermarket competitors, who expect little sales growth as they battle for market share with Wal-Mart Stores Inc.
Kroger Co., for example, estimates identical-store sales growth of 2% to 3% for 2010. Supervalu Inc. said it expects identical-store sales to decline 5% excluding fuel for the 12 months that began in March.
Still, Whole Foods’ higher-income customers attracted to grass-fed beef and other so-called “natural” foods have helped the company boost profit and add stores.
By 2014, the company plans to add another 48 stores to the 298 it already operates in the U.S., Canada and UK.
For the three months ended July 4, Whole Foods posted net income of $65.7 million, up 54% from $42.8 million during the same period a year earlier, the company said in the Aug. 3 statement.
Sales rose 15 percent, to $2.16 billion.
Whole Foods projected earnings per share in 2011 at $1.59 to $1.64, up from $1.37 to $1.39 in 2010. Analysts on average estimated the company’s 2011 earnings at $1.57 a share, according to Thomson Reuters I/B/E/S.
In midday trading Aug. 4, Whole Foods shares fell $2.94, or 7.4%, to $36.55. The stock is still up 33% this year.
(Source:ThePacker)