U.S. News

Whole Foods Misses Estimates as Sales Growth Slows


Whole Foods Markets said on Wednesday that first-quarter profit fell 11.2% as the natural and organic foods giant continued to show slower growth in sales.

Shares of the company fell more than 10% in pre-market trading this morning.

Austin, Texas-based Whole Foods said it earned $46 million, or 32 cents a share, in the quarter ended April 8, down from $51.8 million, or 36 cents a share, a year earlier.

Analysts had expected profit of 36 cents a share, according to a survey by Thomson Financial.

Revenue increased 11.5% to $1.46 billion. Same-store sales, a key measure in retailing, rose 5.1%.

Those gains in revenue and same-store sales would be welcome at most retailers, but Whole Foods had recorded double-digit gains for many quarters. A year ago, same-store sales, or sales at stores open a year or more, rose 11.9%.

Whole Foods has struggled to keep up its previously frenetic pace of growth as supermarkets expanded their offerings of organic and natural foods, often at lower prices.

To boost growth, the company announced in February that it would buy smaller rival Wild Oats Markets for $565 million.

But staffers at the Federal Trade Commission "have voiced concerns regarding perceived anticompetitive effects" from the deal, Whole Foods said. And last week, Wild Oats reported that first-quarter revenue rose just 4 percent and profit fell 44 percent because of expenses related to the sale.

Whole Foods has extended its tender offer for Wild Oats shares to May 22.

The chain has also continued on a store-building binge of its own, opening six new stores in the first quarter and 15 for the past year.