NEW YORK — Shares of Whole Foods Market, Austin, Texas, fell about 5% — to close at $39.12 Friday following a negative overview of the company's prospects by Meredith Adler, an analyst with Lehman Bros. here. Whole Foods is scheduled to release first-quarter results later today. Adler downgraded the stock from "equal weight" to "underweight" and forecast earnings per share of 24 cents — 12 cents below Wall Street's consensus estimate of 36 cents — to reflect the shutdown of 11 Wild Oats stores early in the quarter and the costs of acquiring and integrating the remaining stores. Adler said she based her concerns on "management's poor stewardship of capital" since last year's Wild Oats acquisition "and strains on the organization created by integrating more than 60 acquired stores while opening 22 new ones, the most in its history," which she said raises questions about its ability "to manage its expense structure by becoming more efficient." Other concerns, she said, include "an increasing amount of competition from conventional and niche food retailers [while Whole Foods] has yet to show it has other competencies [and] the company's ability to generate adequate returns going forward, given a pipeline of big, expensive stores and the potential for a further sales slowdown." Adler also said she was concerned that Whole Foods sold 35 Wild Oats stores to Smart & Final for an average of $2 million less per store than the price it paid for them; that two-thirds of the remaining Oats stores are in areas with low population densities; and that overall sales may not hold up as well during the current economic slowdown as they did during the 2001-2002 recession, despite its affluent and loyal customer base.

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