Whole Foods’ Shares Fall on Earnings Miss

AUSTIN, Texas (Austin American-Statesman/TNS) -

Whole Foods Market shares fell on another earnings miss for the embattled organic-foods giant Wednesday.

The Austin, Texas-based retailer fell short of Wall Street’s expectations with its fiscal fourth-quarter earnings, and its stock dropped more than 6 percent in after-hours trading.

Whole Foods said it saw quarterly earnings per share of 16 cents, down from 35 cents a year ago, and record revenues of $3.4 billion, up 6 percent from THE $3.3 billion posted in the same quarter in 2014. Analysts had projected earnings per share of 35 cents and $3.47 billion in revenues for the quarter ending Sept. 27.

Whole Foods also lagged expectations as same-store sales fell 0.2 percent, below the 0.7 percent gain forecast issued by some analysts. And the picture may not improve in the first quarter of the new year as same-store sales are down 2.1 percent through Nov. 1, the company said.

“In the face of increasing competition, we are not standing still. We have made measurable progress on many of our strategic initiatives over the past year,” John Mackey, Whole Foods co-founder and co-CEO, said in the report. “Through our strong balance sheet and robust cash flow, we self-funded our new store development and strategic investments while returning close to $700 million to our shareholders through dividends and share repurchases.”

For the fiscal year, Whole Foods posted record sales of $15.4 billion, up 8 percent from $14.2 billion in the previous year. The retailer saw same-store sales growth of 2.5 percent, compared with 4.3 percent a year earlier.

The retailer also on Wednesday announced a new capital-allocation strategy, including plans to buy back $1 billion of its own shares. When companies believe their stock is undervalued, they sometimes pursue a strategy of buying back stock to boost returns for existing shareholders.

The organic-foods giant closes out a challenging year as it battled declining sales and increased competition. As a result, Whole Foods stock has fallen more than 40 percent in the past year, most recently trading near the $30 mark, near the low end of its 52-week range of $29.73 to $57.57.

Ahead of the earnings report, shares in Whole Foods closed down 51 cents to $30.76 on Wednesday, on a heavy trading day. More than 10.3 million shares traded hands ahead of the report, nearly double the average daily level of 5.5 million.

In after-hours trading, shares fell $1.91, or 6.2 percent, to $28.85.