Whole Foods Market Inc.'s shares fell sharply Wednesday morning after the company posted flat earnings for its second quarter and lowered its 2014 same-store sales and earnings forecasts. Whole Foods sales growth is also cooling due to increased competition, analysts say.


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Whole Foods shares fall on 2nd qtr. results

May 7th, 2014

AUSTIN, Texas – Whole Foods Market Inc.'s shares fell sharply Wednesday morning after the company posted flat earnings for its second quarter and lowered its 2014 same-store sales and earnings forecasts. Whole Foods sales growth is also cooling due to increased competition, analysts say.

The company posted same-store sales growth of 4.5% for the fiscal second quarter ended April 13, which was weaker than analysts expected and down from the 5.4% gain the company posted in the previous quarter. Whole Foods attributed a negative impact of about 50 basis points to the shift of Easter from the second quarter last year to the third quarter this year.

Total sales for the quarter increased 10% to a record $3.3 billion. Net income was flat at $142 million.

The company's new 2014 forecasts call for earnings per share to be $1.52 to $1.56, down from $1.58 to $1.65 previously, and same-store sales growth to be from 5% to 5.5%, down from 5.5% to 6.2%.

Meanwhile, Whole Foods continues to expand. The company opened three stores in the second quarter, and so far in the third quarter it has opened another new store and completed its acquisition of four New Frontiers Natural Marketplace stores in Flagstaff, Prescott and Sedona, Ariz.; and San Luis Obispo, Calif. The company expects to open seven additional stores in the third quarter and another 11 to 14 stores in the fourth quarter.

Whole Foods currently has 379 stores, and it expects to cross the 500-store mark in 2017. The company ultimately believes the U.S. market can support 1,200 Whole Foods Market stores.

"The rapidly growing demand for fresh, healthy foods affirms our mission for the last 36 years and highlights the increasing growth opportunity ahead of us," said co-founder and co-chief executive officer John Mackey. "Whole Foods Market is the premier brand in natural and organic foods, with unparalleled quality standards and the broadest selection. As we continue to innovate and evolve at a fast pace, we are confident in our ability to gain market share and expect our sales to approach $25 billion over the next five years."

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