Shares in US organics retailer Whole Foods Market closed down yesterday (18 February) after the company booked falling profits and same-store sales for its first quarter.
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Whole Foods stood at US$9.29 at the close of trading, a fall of 0.32%, after rising as high as $10.02 earlier in the day.
The company, which has seen its business pressured by the economic downturn in the US, said identical-store sales fell 4.9% during the 16 weeks to 18 January. Group turnover inched up 0.4% to $2.5bn.
Net profit dropped to $32.2m against $391m a year earlier. EBITDA reached $147.8m, which was flat on the level seen a year earlier, Whole Foods said.
Chairman and CEO John Mackey said Whole Foods’s decisions last year to reduce capital expenditure and monitor costs are helping the business navigate the downturn.
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By GlobalData“The difficult strategic decisions we made last August to contain costs and cut capital spending are helping us successfully manage through this challenging economic environment,” Mackey said. “Despite flat sales in the first quarter, our EBITDA was approximately equal to last year; we produced strong cash flow from operations, and we generated $31.8m of positive free cash flow.”
Whole Foods remains in talks with US regulators over the retailer’s 2007 merger with rival Wild Oats Markets. Uncertainty has surrounded the US$565m deal since the summer when a US appeals court overturned an earlier ruling allowing the transaction to go ahead.
Whole Foods said it had incurred $11m of legal costs related to the dispute during the quarter and added that it expected to see more costs in the year ahead.
The retailer said comparable-store sales during the first four weeks of its second quarter had fallen 4.5%, with identical-store sales down 5.4%.
Looking further ahead, Whole Foods refused to issue a forecast for comparable-store sales growth for the full fiscal year due to the “uncertain and rapidly changing economic environment”.
The retailer forecast capital spending to reach $350-400m, down from an earlier estimate of $400-450m.
The company now expects capital expenditure in the range of $350m to $400m for the fiscal year.
Mackey said: “With fewer than 300 stores today, we remain very bullish on our long-term growth prospects, as demand for natural and organic products continues to grow and as our company continues to evolve.”
