Whole Foods Unexciting, Yet Perhaps Enough (WFMI)

Whole Foods Market, Inc. (NASDAQ: WFMI) has reported its quarterly earnings at $0.19 non-GAAP EPS and $1.86 billion in revenue.  Thomson Reuters had consensus estimates of $0.18 EPS and $1.87 billion in revenue.  Be advised that the earnings included non-cash asset impairment charges of approximately $13 million, or $0.05 per share.  The company noted that same store sales for the quarter came in at -4.1% in the quarter, yet it showed operating cash flow of $173 million and generated $98 million of free cash flow.

CEO John Mackey said, “…we are maintaining our prior fiscal year ranges for estimated EBITDA, EBITANCE and diluted earnings per share, excluding asset impairment charges and assuming just under $8.0 billion in sales.”

As far as the overall growth, that is much slower because of the economy.  It sees opening two additional stores (including one relocation) in the third quarter and sees opening three stores in the fourth quarter.

For the first four weeks of the third quarter ended May 10, comparable store sales fell 3.9%, and identical store sales fell 5.0%.  If the Company’s comparable and identical store sales in the second half of the year are consistent, total sales in fiscal year 2009 would be just under $8.0 billion, including the opening of seven new stores in the second half of the year, three of which are relocations.  Thomson Reuters has estimates at $8.04 billion, so this is a tad light to in-line.

So far we have not seen shares sell-off on the news.  The difference of our call for a double and the actual double that came was that this actual double took about 18 months less than we thought.

Shares closed down 9% at $20.00 during the normal trading day, yet shares are actually up close to $22.00 in the after-hours session.  The 52-week trading range is $7.04 to $34.08, and this was a $50 stock just about 20 months ago.

JON C. OGG