DENVER—Natural and organic grocer Wild Oats Markets Inc. on Thursday reported a 97 percent drop in second-quarter net income largely due to higher costs and a jump in expenses related to its planned $565 million buyout by rival Whole Foods Inc.
For the quarter ending June 30, net income fell to $127,000, or less than 1 cent per share, from $4.9 million, or 16 cents per share in the second quarter of 2006. Revenue rose 5 percent to $311.8 million from $296.6 million in the year-ago quarter.
Selling, general and administrative expenses totaled $16.4 million, up from $11.4 million, while restructuring and asset impairment charges climbed from $295,000 to $372,000.
Analyst Michael Krestell, who follows Wild Oats for Toronto brokerage M Partners Inc., said the results were improved and noted comparable same-store sales rose 3.1 percent, excluding the extraordinary items.
“The improvement is especially impressive given the amount of distraction,” Krestell said in reference to litigation surrounding Whole Foods’ planned takeover.
Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.
For the first six months, Boulder-based Wild Oats reported $1.8 million in net income, or 6 cents a share, compared with $7.8 million, or 26 cents a share, in 2006. Revenue totaled $621.7 million, up from $594.9 million.
Wild Oats stock dropped 34 cents to $15.18 in afternoon trading. The price has ranged from $13.88 a share to $18.81 a share in the past year.
Whole Foods of Austin, Texas, announced plans in February to buy Wild Oats for $18.50 a share, which was a 17 percent premium at the time. The Federal Trade Commission is trying to stop the transaction, contending it would lead to higher prices for customers of the organic foods markets.
The FTC has asked for a preliminary injunction on antitrust grounds, and a federal judge in the District of Columbia is expected to rule on that request by mid-August.
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