Q2 Earnings Down as Whole Foods Moves to Complete Rebranding Effort

ELLIOT ZWIEBACH

AUSTIN, Texas — Whole Foods Market here said yesterday it expects to complete its rebranding of Wild Oats by the end of the fiscal year, though it will spend another couple of years completing remodeling activity at some locations. Since acquiring the Wild Oats chain last summer, Whole Foods has put its name on 27 locations, John Mackey, chairman and chief executive officer, said. Sales at those stores accelerated from an average of 6% after remerchandising but before rebranding to 12% after the Whole Foods banner was hung, he indicated. "Sales have gone up in every instance where we've changed the name," Mackey said. "But we don't rebrand a store till it has been remerchandised and is worthy of having the Whole Foods name on it." Mackey said Whole Foods will rebrand the remaining 58 Wild Oats stores by the end of the fiscal year. Net income at Whole Foods declined 13.1% to $40 million for the 12-week first quarter that ended April 13 — including a negative impact of approximately $8.6 million, or 6 cents per share from Wild Oats — while sales jumped 27.6% to $1.9 billion and comparable store sales rose 6.7%. Excluding the impact of Wild Oats, sales rose 15.6% to $1.7 billion. Comps through May 11 were up 5.7% at Whole Foods and 5.6% at the 58 Wild Oats stores. For the first half, net income fell 20.7% to $79.1 million, while sales increased 29.7% to $4.3 billion and comps rose 8.2%.

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