Whole Foods Shares Stumble After Profits Leave Investors Unsatisfied

By Samantha Sharf, Forbes Staff

Since its founding in 1980, Whole Foods Market has lured shoppers with the promise of fresh and sustainable groceries. Today, that promise is proving not enough to satiate shareholders. Whole Foods shares were trending down after hours following a weaker than expected earnings report and a narrowed full year outlook.

Whole Foods Market reported $4.2 billion in first quarter revenue, up 10% from the same period a year ago. Same store sales growth, however, slowed to a 5.4% increase versus a 5.9% increase in the prior quarter and a 7.2% increase a year earlier. And average weekly sales came in at $719,000 or $983 per square foot of store space.

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At $158 million net income was well below Wall Street analysts’ consensus estimate of $165.million. Per share earnings came in at 42 cents, 2 cent short of Street expectations.

“We are very confident in our future growth potential and are moving aggressively to take advantage of that opportunity,” said co-CEO Walter Robb. The company currently has 373 stores including 10 added during the quarter. There are 107 news store in its pipeline for the next two year. “Over the longer term,” Robb added, “we see demand for 1,200 Whole Foods Market stores in the U.S. alone.” Currently the company operates just a handful of stores outside of the United States, in the United Kingdom and Canada.

The company also shared that same store sales are up 5.6% so far in the second quarter and 19.5% at its newest stores (less than two years). Investors, however, weren’t swayed by the uptick. Share were down around 6.5% to $51.80 in after hours trading Wednesday.

While the company expects physical growth, it is pulling back on its expectations for fiscal growth. Looking ahead the company expects full year sales growth between 11% and 12%, down from prior outlook of 11% to 13%. Whole Foods also narrowed its comparable store sales growth expectations from between  5.5% and 7%, to between 5.5% and 6.2%. It forecasts earnings per share to fall between $1.58 and $1.65, down from $1.65 to $.69.