Summary: Whole Foods Market warned of substantially lower sales growth in 2007, with its CEO John Mackey saying it would "be a transition year." As a result, its shares tanked 14% in after-hours trading to $51.70, after falling nearly 5% during normal trading to close at $60.12. In pre-market trading today it has traded as low as $48.50. Same-store-sales for '07 were forecast between 6-8%, compared to double-digit growth over the past three years. Mackey noted the intensifying competition, and said there was some cannibalization from new Whole Foods store openings. EPS growth will be "significantly impacted" by higher store opening costs associated with its plans to accelerate store growth. Although, Mackey said the new stores will be important sales drivers "in the not-so-distant future." Whole Foods Q4 earnings announced yesterday missed analyst estimates for revenue by about $30 million at $1.29 billion, despite 16% y-o-y growth. Net income was up more than 3-fold to $39.8 million ($0.28/share), a favorable comparison because of a one-time charge last year.
Related links: Whole Foods: Q4 2006 Earnings Press Release and Conference Call Transcript • Notable Calls Blog: Analysts comment on WFMI's disappointing results (scroll/search for WFMI) • Additional earnings coverage: Bloomberg and MarketWatch • Jim Cramer made a bearish call on Whole Foods on Oct. 30th, whereas he was bullish on Oct. 20th • Hain Celestial Group: Q1 2007 Earnings Press Release • In late August, Reuter's Marc Gerstein pointed out the vulnerability of some upscale consumer stocks
Potentially impacted stocks and ETFs: Whole Foods Market (WFMI), Wild Oats Markets (OATS), Hain Celestial Group (NASDAQ:HAIN), Kroger (NYSE:KR), Safeway (NYSE:SWY), Wal-Mart (NYSE:WMT)
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