Whole Foods Market booked a jump in full-year profits but saw its share price sink on investor concerns of fourth-quarter weakness.
For the 52 weeks to 29 September total sales reached a “record” $12.9bn, up 10% on the year. Comparable store sales increased 6.9%, the company added. Full year EBITDA totalled US$1.2bn and net income increased to $551m, from $465.6m in the comparable period of 2012.
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However, during the fourth-quarter total sales were $3bn, up just 2% on the year. EBITDA totalled $274m, compared to $252.2m last year.
Looking to the coming year, Whole Foods revised its outlook downwards based on its year-to-date performance. For the first five weeks of the first quarter, comparable store sales increased 5.8% and identical store sales increased 5.2%, the company said.
“Based on current trends… the company now expects sales growth of 11% to 13%, comparable store sales growth of 5.5% to 7%, identical store sales of 5% to 6.5%, and diluted earnings per share growth of 12% to 15% to $1.65 to $1.69.”
Previously, Whole Foods had predicted sales growth of 12%-14%, comparable sales growth of 6.5%-8%, ID sales growth of 6%-7.5% and EPS growth of $1.69 – $1.72.
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By GlobalDataWhole Foods shares fell 9.77% at 10.46 (EST), declining to $58.16.
“Investor concern will focus on the perceived increase in competitive pressure and effect cannibalization is having on new stores. After the recent stock run, it would not surprise us to see shares pull back on the top-line weakness,” Mark Miller, an analyst with William Blair & Company, said.
However, Miller downplayed such concerns. “In our view, however, slower sales were principally driven by an overall weaker retail environment during the quarter. Moreover, the stronger gross margin experience should alleviate concerns about increased competitive pressure. So while it might be tempting to view this as a chink in the armor, we do not see any fundamental change in the underlying business.”
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