Whole Foods Profit Falls; Sales Slip

Whole Foods Market Inc. on Wednesday gave weak projections for the current quarter as it booked its fourth-consecutive decline in quarterly profit.

Shares, up 0.4% this year, fell 4.6% to $32.10 in after-hours trading.

In the latest period, Whole Foods reported a 2.6% decline in comparable sales, against analysts' projected 2.3% decline, according to FactSet. So far this quarter, it said, comparable sales were down 2.4%. The Austin, Texas, company has projected it will post its first annual decline in comparable sales since 2009.

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

The high-end grocer, 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 addition, it has faced a series of setbacks and bad publicity, including a price scandal last year in New York that led to a $500,000 fine and a recent warning from U.S. health regulators over food safety at a Massachusetts plant that makes prepared foods and other products for more than 70 stores in eight states along the East Coast, from New Jersey to Maine.

Over all for the 12 weeks ended July 3, Whole Foods reported a profit of $120 million, or 37 cents a share, compared with $154 million, or 43 cents a share, a year earlier. The most-recent quarter's results were based on 11% fewer shares outstanding.

Revenue rose 2% to $3.70 billion.

Analysts surveyed by Thomson Reuters had projected 37 cents a share on $3.73 billion in revenue.

Gross profit margin narrowed to 34.7% from 35.6% a year earlier.

In the current quarter, Whole Foods expects to make 23 cents to 24 cents in adjusted profit with sales increasing 2% from the year-earlier period. Analysts surveyed by Thomson Reuters project 25 cents a share in adjusted profit on $3.56 billion in sales, a 3.6% increase from the year-earlier period.

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

(END) Dow Jones Newswires

July 27, 2016 18:15 ET (22:15 GMT)

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