DALLAS—Whole Foods Market Inc. said Tuesday that its profit slipped in the most recent quarter despite higher sales, as the natural and organic retailer doubled spending on new stores.
The Austin-based grocer, which is also fighting this week to save its takeover of rival Wild Oats Markets Inc., said it earned $49.1 million, or 35 cents per share, compared to $53.9 million, or 37 cents per share, a year earlier.
Analysts had expected profit of 33 cents per share, according to a survey by Thomson Financial.
Revenue rose 13 percent to $1.51 billion from $1.34 billion a year earlier, but that was less than the $1.54 billion that analysts expected.
Shares of Whole Foods rose 26 cents, to $37.04 in trading before the results were released. The shares jumped $3.17 or 8.6 percent in extended trading.
Whole Foods catapulted to success by tapping into consumers’ desires for healthy food, but the company’s growth has tailed off in recent quarters.
Sales at stores open at least a year—a key measure in retailing—rose 7 percent in the quarter ended July 1, but that was down from a 9.9 percent jump a year ago.
Co-founder and Chief Executive John Mackey said same-store sales were up 7.6 percent in July, indicating that the company’s performance by that measurement has stabilized.
The company said it spent $15 million on new and relocated stores in the recent quarter, compared to $7.9 million a year ago.
Meanwhile, a federal district judge in Washington began hearing evidence Tuesday in the Federal Trade Commission’s request for an injunction to block Whole Foods from buying Wild Oats for $565 million.
The regulators say combining the two leading natural-foods grocers would hurt competition and raise prices for consumers. Whole Foods says plenty of other supermarkets sell natural and organic food.
The hearing was scheduled to end Wednesday, and a decision is expected by mid-August. The FTC would like to review the deal further even if it loses the injunction ruling, but Whole Foods won’t be waiting around for the regulators to act.
“If we’re allowed to go through and close this transaction, we’re going to do so,” Mackey said. “We’ll start closing stores and integrating the companies … Once the eggs get scrambled, they’re kind of hard to unscramble.”
Whole Foods’ stock price has tumbled 19 percent since it announced the deal. The company has endured bad publicity about internal memos in which Mackey boasted about eliminating a competitor, and about his anonymous postings on financial Web sites in which he touted Whole Foods and said Wild Oats shares were overpriced—before his company paid a higher price for them.
Mackey said if the sale goes through, “that will be positive PR.” He declined to comment on his anonymous postings because of an SEC investigation.
Even without Wild Oats, Mackey said Whole Foods was still on track for $12 billion in annual sales by 2010.
The company is planning 94 new and bigger stores that would increase the chain’s square footage by two-thirds. Whole Foods opened 14 stores in the past 10 months, bringing it to 196, and plans four to six more the next two months.
