Earnings Preview: Whole Foods Market Inc.

posted: 23 DAYS 16 HOURS AGO

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PORTLAND, Ore. -Whole Foods Market Inc. is scheduled to report earnings for its fiscal fourth quarter Wednesday. The following is a summary of key developments related to the period.

OVERVIEW: Whole Foods will report whether a recent uptick in its business carried through into its fourth quarter.

The natural and organic goods grocer, which is based in Austin, Texas, struggled when the recession hit and shoppers cut back on their spending and focused on more value-oriented stores. However, the company cut costs, secured a major investor, increased its store brand offerings and promoted its other lower-priced options to draw shoppers.

The actions paid off at some levels: total sales at Whole Foods grew in the third quarter, ending a slump that lasted several quarters, and its profits grew 3 percent — beating expectations.

Whole Foods CEO John Mackey said at the time that the company is seeing early signs of stability but said at the time it was to early to tell where it is going.

BY THE NUMBERS: Analysts polled by Thomson Financial expect the company to earn 18 cents per share on revenue of $1.84 billion for the quarter.

WHAT'S AHEAD: Whole Foods will continue to see the recession drag on consumer's spending but said it will remain focused on its core customers who are interested in the best organic foods.

ANALYST TAKE: J.P. Morgan analyst Charles Grom increased his estimate to 23 cents per share from 20, saying the company's sales, gross profit margin and discipline on spending have improved.

In a note to investors, he said the company has been successful in combating its "whole paycheck" image. While he anticipates sales at stores open at least a year are likely to be down, he said the company is making meaningful progress in its top line performance, which can take time.

Grom maintained a "neutral" rating on Whole Foods shares.

STOCK PERFORMANCE: Shares grew 60 percent during the quarter and have grown nearly 200 percent in the past 52 weeks.

2009-11-02 15:42:56