Tags: Whole | Foods | Profit | Competitors

Whole Foods Profit Growth Stalls as Competitors Step In

Tuesday, 06 May 2014 05:45 PM

Whole Foods Market Inc. isn’t the only place to buy organic kale anymore.

The largest U.S. natural-goods grocer Tuesday posted second-quarter profit that trailed analysts’ estimates as increasing competition from traditional supermarkets and other organic-food sellers eats into sales. It also cut its forecast for the year, sending the shares down sharply in late trading.

Whole Foods has been opening more stores and trying to lower its prices to attract more customers. At the same time, Kroger Co. is pushing organic beef and vegetable chips under its Simple Truth brand, and Sprouts Farmers Market Inc. is opening more locations in states including Texas and California.

Whole Foods’ net income for the quarter ended April 13 was $142 million, or 38 cents a share, about the same as a year earlier, the Austin, Texas-based company said in a statement. The average of 30 analysts’ estimates compiled by Bloomberg was 41 cents. Sales rose 9.7 percent to $3.32 billion, missing projections.

The retailer lowered its forecast for profit this fiscal year to as much as $1.56 a share, excluding certain items, compared with a previous projection of as much as $1.65. Analysts estimate $1.61 a share, on average.

Shortly before 6 p.m. in New York, Whole Foods' shares traded at $41.08, down 14.3 percent the closing price of $47.95. The shares had dropped 17 percent this year through regular trading Tuesday, while the Standard & Poor’s 500 Index climbed about 1 percent.

Rival Offerings

Kroger’s Simple Truth brand is growing at an “astonishing pace,” Chief Operating Officer Michael Ellis said on a conference call in March. Meanwhile, Target Corp.’s organic and better-for-you products are “picking up steam,” Kathryn Tesija, an executive vice president, said on a conference call in February.

Even Wal-Mart Stores Inc. sells some organic food, and its website has recipes and nutrition tips.

Sales at Whole Foods stores open at least 53 weeks rose 4.5 percent in the quarter and will gain as much as 5.5 percent in the year. Same-store sales are considered an indicator of a retailer’s performance because they include only older, established locations.

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Whole Foods Market Inc., the largest U.S. natural-goods grocer, Tuesday posted second-quarter profit that trailed analysts' estimates as increasing competition from traditional supermarkets and other organic-food sellers eats into its business.
Whole, Foods, Profit, Competitors
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2014-45-06
Tuesday, 06 May 2014 05:45 PM
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