Whole Foods' Shares Slip on Lowered Sales Forecast, Slow Q4 Growth

Whole Foods' (NASDAQ:WFM) shares slipped 9.2% to $58.52 in afternoon trading Thursday, Nov. 7, after the specialty foods retailer reported lower-than-expected sales comps for the quarter and a slightly cautious outlook for next year.

Despite seeing an increase in same-store sales and revenue, the results fell short of analysts' estimates. During the fourth quarter of fiscal 2013, the Austin-based chain posted net income of $121 million, or 32 cents per share, up 7 percent from $113 million, or 30 cents per share, a year earlier. Same-store sales rose 5.9 percent, slower than the 7.5 percent gain in the third quarter and lower than the 8.5 percent gain from a year ago.

Quarterly revenue rose just 2 percent to $2.98 billion, missing the $3.04 billion Wall Street expectation. Sales at stores open for the last 12 months rose at the slowest pace in two years.

Although the quarter wasn't a disaster, Whole Foods lowered guidance for the new fiscal year. The company expects earnings of $1.65 to $1.69 per share compared to the $1.69 to $1.72 previously forecast, and the $1.73 estimated by analysts. The trimmed outlook could be the result of increased competition in the natural and organic foods marketplace. Whole Foods, which has 367 locations, now faces competition from other grocers that have begun offering more products and sections labeled as natural or organic. As consumers remain cautious about spending in the wake of last month's government shutdown and the upcoming holiday season, Whole Foods also has to combat its reputation as an upscale, higher-priced market.

Despite these challenges, Whole Foods is confident it has market potential for 1,000 stores in the U.S. The company opened 12 stores in the fourth quarter, resulting in 32 store openings in the fiscal year and expects to open five additional stores in the first quarter of fiscal year 2014.

For more see:
This Washington Post story
This Whole Foods press release

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