BOULDER, Colo. - Determined to turn its private-label goods into a national brand, Wild Oats Markets here is in talks with several regional retailers about adding Wild Oats products to their shelves, Chief Executive Officer Perry Odak said last week.
Wild Oats, whose private-brand goods are currently available in several channels, including Peapod.com and Amazon.com and in select Stop & Shop stores in the Northeast, expects to announce alliances with unnamed "upscale regional retailers" in the coming months, Odak said in a conference call.
The company has introduced 185 new private-label items this year and plans another 200 by the end of the year, Odak said. "Not only does growing our private label help expand the Wild Oats brand with high-quality premium product lines, but also provides the opportunity to enter new retail channels to grow a stronger national brand more quickly," he said.
The natural food retailer is also determined to grow its own footprint: The company has 20 leases or letters of intent signed with developers for new stores, Odak said, and it continues to look at new locations on the market, including Albertsons and Winn-Dixie stores, as a means of expansion. Odak previously said Wild Oats was looking at as many as 30 Albertsons stores that are closed or closing in the wake of the company breakup. He said Wild Oats would team with developers to divide sites larger than the company's 31,000- to 33,000-square-foot "sweet spot" for new stores.
Odak discussed the plans while reviewing quarterly results that "for the most part" were good, Odak said. Wild Oats used cost controls and better-margin sales to increase profits, but same-store sales growth for the fiscal second quarter, which ended July 1, slowed considerably compared with last year's second quarter.
Aggressive promotions of organic goods by competing conventional supermarkets - particularly Safeway's O Organics line in the Rocky Mountain region - helped slow same-store sales growth from 5.4% in the 2005 second quarter to 1.3% this year. Moving a holistic-health promotion that occurred in June last year to a later part of the year this year also affected comps, Odak said. Overall sales of $296.6 million increased 4.2% compared with the same period last year.
Odak said conventional stores aggressively promoting their natural and organic lines took away some sales that might otherwise go to Wild Oats, but he emphasized that the growth of the natural/organic category in the conventional chain will ultimately benefit Wild Oats as conventional store offerings tend to be "gateways" to the "lifestyle" to which Wild Oats caters.
"We have a short-term hit, but a long-term impact trend moving in the favorable direction," Odak said.
The slowing comp sales prompted Wild Oats to reduce its full-year same-store sales estimates from 4%-5% to 3%-4%.
Better margins and expense leverage drove quarterly earnings up to $4.6 million, vs. $922,000 a year ago. The company said full-year earnings should be 38-43 cents per share, up from earlier estimates of 34-40 cents.
For the six-month period, Wild Oats reported earnings of $7.8 million on sales of $594.9 million. Sales for the first half were up 5.7%.