Whole Foods Stock Hit on Earnings, Halted Dividend

Whole Foods Market posted a lower quarterly profit that missed Wall Street estimates on Tuesday, and suspended its dividend as the weak U.S. economy hurt sales, pushing down its shares 14 percent in extended trading.

A Whole Foods Market in Dallas.
Donna Mcwilliam
A Whole Foods Market in Dallas.

The natural foods grocery chain, which a year ago bought rival Wild Oats for $565 million, said annual sales growth would likely trail previous forecasts even though sales at established stores rose 1.5 percent in the first four weeks of the current, fiscal fourth quarter.

Results "are not good,'' said Edward Jones analyst Stephanie Hoff, who said comparable-store sales growth for the fiscal third quarter was also short of expectations.

"You have a company that used to post above the main-line grocery stores now posting more in-line with grocery, so I think that's suggesting a share shift,'' she added.

The Austin, Texas-based company had fiscal third-quarter net income of $33.9 million, or 24 cents per diluted share, compared with its year-earlier net income of $49.1 million, or 35 cents per share.

Analysts had expected a profit of 31 cents a share, according to Reuters Estimates.

Charges related to the Wild Oats acquisition lowered earnings by about 3 cents per share, Whole Foods said.

Revenue rose nearly 22 percent in the quarter to $1.8 billion, below the $1.9 billion analysts had expected.

Comparable store sales rose 2.6 percent and identical store sales, excluding two relocated stores and two major expansions, rose 1.9 percent. Those figures are used to gauge health at
grocery stores.

Whole Foods said it was suspending its quarterly dividend and added it was cutting store growth for fiscal 2009 to about 15. The company had previously planned 25 to 30 new stores for 2009.

It forecast a profit of 93 cents to 95 cents a share for the full year. Analysts expected $1.15 a share for the year, according to Reuters Estimates.

The company's shares fell about 14 percent to $19.64 in trading after the bell from their $22.92 close on Nasdaq.