(By Salman - iStockAnalyst Writer)Whole Foods Market Inc. (NASDAQ:
) is scheduled to report its second quarter earnings report earnings after the market close on Tuesday, August 4. Analysts on average expect the company to earn 19 cents per share on revenue of $1.86 billion for the quarter. In the year ago period, the company reported earnings of $0.35 per share on revenue of $1.51 billion.
Whole Foods Market Inc., together with its subsidiaries, engages in the ownership and operation of natural and organic foods supermarkets primarily in the United States. As of September 30, 2008, the Company operated 275 stores organized into 11 geographic operating regions, 264 stores in 38 United States of America states and the District of Columbia; six stores in Canada, and five stores in the United Kingdom.
The company's fiscal second quarter net income plunged 32% to $27.3 million, or 19 cents a share, from $40.0 million, or 29 cents per share, a year ago. It was the tenth-straight quarterly revenue decline for Whole Foods. Revenue remained flat at $1.9 billion. Analysts on average expected the company to earn 18 cents per share on revenue of $1.87 billion.
The company has been hit hard by a severe economic downturn, rising layoffs, sinking consumer spending and rising competition. Whole Foods, being more expensive than supermarkets run by traditional operators like Kroger Co (NYSE:
), has lagged behind its rivals in the fight over fewer food dollars being spent by consumers. The growth in organic food sector is slowing as Americans tighten their purse strings and opt for cheaper alternatives. Moreover, the organic movement has been mostly confined to wealthier and more educated demographics.
Whole Foods has been quite slow in adjusting to challenging economic conditions. The company has only recently initiated cost cutting measures like suspension of dividend, downsizing corporate-level functions, delaying store openings etc. It is also trying hard to shed its pricey image in order to attract shoppers. In March, Whole Foods agreed to sell 13 of its stores to settle the FTC's challenge of its $565 million acquisition of Wild Oats Markets.
Investors are expected to pay special attention to comparable store (comp sales) or same store sales numbers. Same store sales reflect the ability of the existing stores (stores greater than one year old) to generate revenue. Over the past few years, the comp sales of Whole Foods Market has shown a downward trend. In the last quarter, the company's same store sales plunged 4.8%.
Shares of the company are currently trading at roughly 27 times consensus 2011 EPS estimates. In terms of stock performance, Whole Foods shares have gained 150% since the beginning of the year. On Monday, shares of the company rose 61 cents or 2,5% to $24.80.
Disclosure: Author doesn’t own any of the stocks mentioned here.
