BOULDER, Colo. -- Wild Oats Markets here said last week a slowdown in the growth of comparable-store sales in the fourth quarter was largely the result of out-of-stocks caused by the company's decision to attempt stockkeeping unit rationalization at the same time it was changing its primary distributor.
Last June, Wild Oats signed a three-year distribution contract with Tree of Life, St. Augustine, Fla., a subsidiary of Koninklijke Wessanen, a Dutch food company, when its contract expired with United Natural Foods, Dayville, Conn.
During a conference call with industry analysts to discuss results for the 13-week quarter and year ended Dec. 28, Perry Odak, Wild Oats' president and chief executive officer, said, "We realize that our transfer to Tree of Life caused customer service to suffer" by forcing store personnel to focus on dealing with the new distributor and by causing out-of-stocks.
In fourth-quarter 2002, comps grew 2.9%, compared with an increase of 5.7% in fourth-quarter 2001.
Odak said the company expects year-to-year comps growth of 4% to 7% during the next three years, with 2003 coming in at the low end of that projection. Comps grew 5.2% in 2002, compared with 4% in 2001.
He added that the company expects earnings of 36 cents to 40 cents per share in 2003, 60 cents to 65 cents per share in 2004, and 80 cents to 90 cents in 2005.
Odak also said Wild Oats plans to accelerate new store development over the next three years, with 10 new stores scheduled to open in 2003, 15 to 20 in 2004, and 20 to 25 in 2005. Late last week, the company was scheduled to open a Henry's Marketplace in Costa Mesa, Calif., that would introduce its new farmers' market prototype design. Seven additional stores are scheduled to open during the third and fourth quarters in California, Colorado, Kentucky, Tennessee and Utah.
In the quarter, sales declined 0.1% to $221.8 million, net income was $2.6 million, and earnings per share were 9 cents, compared with losses in the previous year's fourth quarter of $2.8 million and 11 cents a share, respectively.
In the year, sales rose 2.9% to $919.1 million, comps grew 5.2%, net income was $6.9 million, and earnings per share were 26 cents, compared with losses in the previous year of $43.9 million and $1.80 per share, respectively.