WHOLE FOODS CRIES WOLF OVER 'FALSE' REPORT

SAN ANTONIO -- Whole Foods Market here said last week that negative comments about its profitability by an independent research publication were without basis in fact as it reported increased sales and same-store sales for the second quarter ended April 12.

on the content of the report when contacted by SN last week.

Whole Foods said the report resulted in a sell-off of its stock and a drop in the stock price from $67 to a two-month low of 58-7/8 early last week because of a false characterization of the chain's profits after it took write-offs associated with two recent mergers.

"The implication in the report is completely false and without basis in fact," John Mackey, chief executive officer, said. "The core factors driving our operating profits are strong sales, purchasing leverage, the performance of the Fresh Fields stores and our improved new-store execution.

"Past merger charges (from the acquisitions of Fresh Fields and Amrion) have absolutely nothing to do with our strong results. We believe our operating margins will continue to show incremental improvements due to these same core factors."

In preliminary results released last week, Whole Foods said sales for the 12-week second quarter rose 25% to approximately $325 million, while same-store sales rose approximately 12%. The company said earnings will be released May 11, "and we expect our results to meet or beat analysts' estimates," Mackey said.

Whole Foods said it opened two new stores during the quarter.