Here's How 'Ugly' Whole Foods' Quarter Really Was

• Whole Foods Market, Inc. WFM shares have declined 42.29 percent year-to-date, touching a low of $29.96 on October 30.
• Longbow’s Alton Stump has reiterated an Underperform rating on the company, while lowering the price target from $27 to $22.
• The company reported its 4Q15 results with the EPS and comparable revenues below the estimates and the consensus, while guiding to a meaningful decline in earnings during FY16.

Analyst Alton Stump mentioned that the 4Q15 results were in-line with Longbow’s latest Specialty Food Retailer Survey, which indicated that Whole Foods’ comps were flat to down 2 percent year-on-year for the quarter.

The company also indicated that comparable sales had declined 2.1 percent in 1Q16 to date, significantly below the prior estimate and consensus.

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“Management expects an EBIT margin decline of up to 75 bps this year and EPS of $1.50 or higher,” Stump stated, adding that “management admitted its forecasts are highly reliant on the company being able to recover comps during FY16.”

In addition, Stump mentioned that the latest checks indicated that Whole Foods might miss expectations once again for 1Q16, while expressing concern that the company’s recent pressured margins “via price-cutting without a noticeable lift to same-store comps will continue over the next 12 months.”

If this were to occur, Stump believes that it would lead to downside pressure on the stock.