US natural and organic retailer Wild Oats reported a dramatic decline in first quarter profits today (3 May). The drop is primarily the consequence of costs associated with its imminent acquisition by larger rival Whole Foods Markets.
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Profit totalled US$1.6m, or $0.5 per share, down from $2.9m, or $0.10 per share, a year earlier.
In February, Whole Foods issued a takeover bid valued at about $565m. Whole Foods offered $18.50 per Wild Oats share, plus the assumption of debt. The companies hope that such a deal will better position them in the face of competition from traditional grocers, who have increasingly moved in on the organic and natural sector.
Excluding transaction expenses, Wild Oats earned $5.1m, or $0.17 per share.
Sales rose 3.9% to $309.9m. However, same-store-sales were up only 0.3% – a considerable slowdown when compared to last year’s 4.1% comparable growth.
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By GlobalDataNonetheless, the company remained upbeat on its outlook for the coming quarter. “The merchandising and marketing programs we put in place in the first quarter are gaining traction and are driving improvement in comparable store sales in the second quarter. We will continue to implement innovative merchandising and marketing programs, and focus on improved store-level operations to drive further sales gains and an improved customer experience,” chairman and interim chief executive Gregory Mays said in a statement.
