Whole Foods has invested in price amid cautious consumer environment

Whole Foods has invested in price amid cautious consumer environment

Whole Foods Market has brought down its forecast range for annual earnings, hitting shares in the US natural and organic retailer today (13 February).

The retailer expects diluted earnings per share of $1.58-1.65 for the year to 28 September, compared to its previous forecast of $1.65-1.69.

Whole Foods also changed its sales forecast. It said it sees annual sales up 11-12%. The retailer had previously estimated an 11-13% increase in sales.

The grocer, which has 373 stores in the US, Canada and the UK, also lowered the top end of its forecast range for comparable-store sales, which stands at a rise of 5.5-6.2%, compared to 5.5-7%.

"The lower end of the company's sales and earnings guidance reflects a year-over-year decrease in gross margin for the remainder of the year, while the high end assumes gross margin is relatively flat, reflecting the company's ongoing value strategy and a tough 36.2% year-ago comparison," Whole Foods said.

BB&T Capital Markets analyst Andrew Wolf said Whole Foods had had to invest in price more than he expected.

"We continue to forecast modestly improved same-store sales trends for Q2'14-Q4'14. But clearly we did not anticipate the degree of gross margin investment in Q1'14; we have therefore lowered our EPS estimates and price target accordingly," Wolf said.

Shares in Whole Foods were down 7.59% at $51.24 at 11:32 ET.

Click here for the full release from Whole Foods.