Whole Foods Q3 Profit Misses Views, Shares Tumble

Shares of

tumbled around 10 percent in after-hours trading after the company reported downbeat earnings for its fiscal third quarter and issued a weak forecast. The Austin, Texas-based company reported quarterly earnings of $154 million, or $0.43 per share, compared to $151 million, or $0.41 per share, in the year-ago quarter. The latest quarter results included $0.01 per share in expense related to the implementation of California's new paid sick leave law. Its total sales climbed 8 percent to $3.63 billion. However, analysts were expecting earnings of $0.45 per share on revenue of $3.69 billion. The average estimate among 80 Estimize users was for earnings of $0.46 per share and revenue of $3.71 billion. Its comparable store sales on a constant currency basis rose 1.3 percent in the quarter. Earnings before interest, taxes, depreciation and amortization came in at $353 million, or 9.7 percent of sales in the quarter. Its gross margin, excluding LIFO, shrank 66 basis points to 35.6 percent. During the quarter, the company repurchased $98 million of common stock, or 2.1 million shares. Whole Foods Market ended the quarter with total cash and cash equivalents, restricted cash, and investments of around $1.0 billion. "In this rapidly changing marketplace, we believe we are taking the necessary steps to position ourselves for the longer term," said Walter Robb, co-chief executive officer of Whole Foods Market. "We remain focused on innovating and evolving to best serve our customers' diverse purchasing preferences. From the unique experience of our Whole Foods Market stores, to our growing online channel for home delivery, to the exciting launch of our 365 by Whole Foods Market stores, we are making investments to extend our reach to both new and existing customers." Whole Foods Market projects Q4 earnings of $0.34 to $0.35 per share on 7 percent sales growth. Analysts expected earnings of $0.38 per share. The company expects FY15 sales growth of 9 percent and comparable store sales to rise in the low single digits. Whole Foods Market shares fell 10.34 percent to $36.60 in the after-hours trading session.