PORTLAND, Ore.—Whole Foods Market Inc. said Wednesday that its profit plunged in the fourth quarter largely on costs related to its acquisition of Wild Oats Markets Inc. The Austin, Texas-based grocer also cut its earning forecast for the year as sales continued to slow.
But shares of Whole Foods jumped 18 percent in after-hours trading on the announcement of a $425 million investment to stabilize the company during uncertain times, through the sale of preferred stock to Green Equity Investors, an affiliate of retail investors Leonard Green & Partners.
Whole Foods reported after the market closed Wednesday that its net income fell to $1.5 million, or 1 cent per share, compared with net income of $33.9 million, or 24 cents per share, in the same quarter of last year. The latest results included a number of one-time charges, totaling 12 cents per share, for an array of costs related to Wild Oats and tax charges for a Canadian subsidiary.
Analysts polled by Thomson Reuters expected Whole Foods to earn 13 cents per share on revenue of $1.81 billion. Analyst estimates typically exclude one-time items.
Sales for the quarter, which ended Sept. 28, increased to $1.79 billion from $1.74 billion.
Whole Foods, which is known more for its high-end goods than low prices, has struggled as shoppers have tightened their spending.
“These are certainly challenging economic times,” Whole Foods Chief Executive Officer John Mackey told investors on a conference call Wednesday
Comparable store sales continued to slip, growing just 0.4 percent for the quarter, compared with an 8.2 percent increase seen in the same quarter last year.
Given the uncertainty of the economy, the company opted not to issue guidance on comparable store sales for the year. But based on flat comparable store sales growth, Whole Foods said its earnings before income taxes debt and amortization would be in the range of $525 million to $545 million for the 2009 fiscal year.
The company estimated it would earn 95 cents to $1 per share for the year adjusted for some one-time costs, lower than the previously estimated range of $1.08 and $1.14.
“I’ve never seen anything like this our lifetime,” Mackey told the Associated Press of the current economic situation.
Given the economy, Mackey said he was pleased with the quarter’s results. “We did a pretty good job in pretty difficult circumstances, which shows we are going to be pretty resilient,” he said.
Mackey said the $425 million investment would give the company “financial flexibility to manage through these difficult economic times” while still investing in long-term growth. Whole Foods has 66 stores in the pipeline for the next four years.
Shares of Whole Foods rose $1.84, or 18 percent, in after-hours trading to $12.15.
