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Whole Foods 4Q profit tumbles, grocer announces $1 billion stock buyback plan; Stock drops

AUSTIN, Texas – Whole Foods Market Inc. on Wednesday reported that its latest quarterly profit fell by more than half, as the grocer faces intense competition, with organic foods becoming more widely available.

The Austin, Texas, company said it earned $56 million, or 16 cents per share, in its fiscal fourth quarter, compared with $128 million, or 35 cents per share, in the July-September period last year.

The earnings included $80 million in charges for restructuring and asset impairment costs, which analysts sometimes exclude in their predictions. Excluding those items, profit came to 30 cents per share.

The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of 35 cents per share.

The grocery chain’s revenue rose 6 per cent to $3.44 billion, which fell short of Street forecasts. Eight analysts surveyed by Zacks expected $3.48 billion.

Sales in locations open at least a year — a key metric of a retailer’s health — were virtually flat, dropping 0.2 per cent.

Whole Foods also announced plans to return more money to shareholders. Its board authorized a buyback plan of up to $1 billion, bringing the total amount available for repurchases to $1.3 billion. And it raised its quarterly dividend by 4 per cent, to 13.5 cents.

For the fiscal year ended Sept. 27, the company earned $536 million, or $1.48 per share, on revenue of $15.39 billion. Revenue at established stores rose 2.5 per cent.

Whole Foods forecast sales growth of 3 per cent to 5 per cent this fiscal year, down from 8 per cent last year. It expects to open about 30 new stores, including three 365 stores — its lower-price division with smaller stores.

Shares slid more than 7 per cent in after-hours trading to $28.47. Whole Foods shares have declined 39 per cent since the beginning of the year, while the Standard & Poor’s 500 index has risen 2 per cent.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on WFM at http://www.zacks.com/ap/WFM

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