Whole Foods Market Inc., Up 22% In 3 Days, Takes Breather

Whole Foods Market Inc.

took a breather Tuesday after a 22 percent gain since posting earnings late Wednesday, but the company could see continued success in comparable sales growth, analysts said. In Tuesday's morning session, Whole Foods inched up less than 0.1 percent, trading recently at $48.08 a share. The Austin, Texas-based retailer is nearing the end of a tough year in the stock market, with its shares still down 17 percent since January. Investors abandoned the shares after a price-cutting strategy initially failed to spark profits and sales growth. But the company, dubbed by wags "Whole Paycheck" because of its pricey goods, expects to continue its price-cutting in the face of rising competition in the so-called natural foods segment from the likes of supermarkets and even Wal-Mart Stores Inc.

Whole Foods recently called it "the right strategy to drive sales growth over the longer term," but warned that its 2015 gross margin will continue to narrow as a result. The gambit might be showing signs of a payoff. Same-store sales in the current first-quarter begun Sept. 29 are up 4.5 percent, compared with 3.5 percent in the fourth fiscal quarter and 3.9 percent in the third period. Opppenheimer's Rupesh Parikh thinks same-store sales growth could "reaccelerate," and recently raised his price target by 11 percent to $50 a share.