Whole Foods profit falls in fiscal 3Q

Whole Foods profit falls in fiscal 3Q

	Published : Tue, 31 Jul 2007 21:48 By : Agencies Print this Story

DALLAS (AP) - 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, before the results were released.

Whole Foods catapulted to success by tapping into consumers' desires for healthy food, but the company's growth has tailed off in recent quarters.

Same-store sales at locations 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 antitrust lawsuit 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.

A lawyer for Whole Foods countered Tuesday that the FTC study was flawed. The company says plenty of supermarkets sell natural and organic food.

The hearing was expected to end Wednesday.

Documents released during the lawsuit have embarrassed Whole Foods. Mackey apologized for his anonymous postings on financial Web sites that touted Whole Foods' stock while denouncing Wild Oats before his company reached a deal to buy the smaller chain.