Wild Oats Markets, the natural and organic grocery chain at the centre of a legal battle over its planned sale to Whole Foods Market, has seen its profits plummet in the first half of the year.

In a filing with the SEC, the company said that net income for the six months ended 30 June was US$1.8m, compared with net income of $7.8m a year earlier.

The company said it had been hit by rising costs and charges. Selling, general and administrative expenses rose 44% while restructuring and asset impairment charges climbed 26%.

Revenues, however, grew. Sales for the six months increased 4.5% to $621.7m. Comparable store sales increased 1.7% for the six-month period.

“We are experiencing sales growth in our existing store base as a result of our marketing and merchandising initiatives. In addition, sales of the company’s corporate branded products to third parties have increased by approximately $3.0m in the first six months of 2007 over the same period in fiscal 2006,” the company said in a statement.

In July, Whole Foods and Wild Oats headed to court to try to push though their proposed merger in the face of fierce opposition from the country’s competition watchdog.

The two companies are battling against the US Federal Trade Commission (FTC), which wants to block the US$565m merger in the belief the enlarged firm would erode competition in the natural and grocery sectors.