Economy Woes, Re-Opened Wild Oats Controversy Trouble Whole Foods

AUSTIN, Texas—Whole Foods Markets (NASDAQ:EFMI) is feeling the squeeze from the slowing consumer spending market, releasing fourth quarter (4Q) and fiscal year 2008 earnings predictions that fall short of the average Wall Street expectation of $0.27 and $1.14 per share, respectively. The company's lowered outlook was paired with news of third quarter (3Q) results, including a decline in comparable store sales, a 30-percent drop in net income, the suspension of its quarterly dividend indefinitely, and projected cost-cutting such as opening fewer stores next year. Comps for the quarter slowed to 2.7 percent from 6.7 percent in the previous quarter, a trend that analysts say could persist in what Whole Foods' CEO John Mackey calls the worst economic environment he's seen in 30 years. Income dragged under costs from the controversial Wild Oats acquisition, which has come under post-closing scrutiny from an appeals court in Washington that ruled the purchase should be re-examined by a federal judge to determine whether it violated antitrust rules.

Source: Bloomberg. August 6, 2008.