Whole Foods Market Cuts Annual Guidance

   By Maria Armental

Whole Foods Market Inc. on Wednesday cut its financial projections for the year and projected a decline in a key sales metric as the supermarket chain tries to revamp operations. Still, the company's adjusted profit came in better than expected, and shares rose slightly after hours.

The Austin, Texas, company, whose name became synonymous with natural and organic foods, has been beset by a sales slowdown as competitors expanded into what had been a niche market. In the latest period, Whole Foods, which this quarter started giving more information on comparable sales at regulators' request, reported a 3% decline in the key metric.

For the year, it now projects profit of up to $1.53 a share with sales increasing up to 3%, as comparable sales fall by up to 2%. Whole Foods had previously projected at least $1.53 a share in profit and sales increasing 3% to 5%.

In 2015, comparable sales rose 2.5%, the slowest pace since 2009.

The company now defines comparable sales as sales at stores it has owned for at least 57 weeks, up from 53 weeks previously.

Over all for the 12 weeks ended April 10, Whole Foods reported a profit of $142 million, compared with $158 million a year earlier, marking the third consecutive quarterly decline. On a per-share basis, profit remained at 44 cents, as the latest quarter had 11% fewer outstanding shares.

Revenue rose 1.3% to $3.7 billion.

Analysts surveyed by Thomson Reuters had projected 41 cents a share on $3.74 billion in revenue.

Gross profit margin narrowed to 34.9% from 35.9% a year earlier, largely due to the increase in promotional spending that company executives have said would carry into the current quarter.

Shares, down 42% over the past 12 months, rose 1.2% to $28.85 in after-hours trading Wednesday.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

May 04, 2016 17:51 ET (21:51 GMT)

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