Whole Foods Lowers 2014 Guidance

AUSTIN, Texas — Whole Foods Market here said Wednesday it is lowering its financial guidance for fiscal 2014 after reporting record results for the year and fourth quarter ended Sept. 29.

John Mackey

The company said it expects sales growth for the year to fall between 11% and 13%, compared with earlier guidance of 12% to 14%; comparable store sales growth of 5.5% to 7%, compared with earlier expectations for 6.5% to 8% growth; and earnings per share growth of 12% to 15%, to a range of $1.65 to $1.69 per share, compared with a range of $1.69 to $1.72.

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"Resetting expectations is always difficult," John Mackey, chairman and co-chief executive officer, told analysts. "But we want to underscore that we have just delivered our fourth consecutive year of increases in new-store openings while producing improvements in operating margin and higher returns on invested capital, and the outlook for fiscal year 2014 reflects of continuation of those trends."

Net income for the 12-week fourth quarter (compared with a 13-week quarter a year ago) rose 7.1% to $121 million, while sales increased 2.2% to $3 billion and comps jumped 5.9%.  For the 52-week year (compared with 53 weeks in the prior year) net income was up 18.2% to $551 million, while sales rose 10.4% to $12.9 billion and comps were up 6.9%.

Walter Robb

Walter Robb, co-CEO, said comps in the quarter were impacted by cannibalization in some markets, particularly in Boston, where Whole Foods reopened five former Johnnie's Foodmaster stores under its own banner during the quarter. He said the company expects comps to return to normal by the end of the year.
Asked by an analyst if the chain's accelerated sales growth was creating more cannibalization that would impact comps going forward, Robb said the impact in any market would only be temporary. "But this is a no-excuse company," he added.  "We're putting a lot of chips down to grow the company, and occasionally cannibalization will affect some markets."

Read more: New Whole Foods Store Ramps Up Fresh Offerings

Whole Foods said it plans to open between 33 and 38 new stores this year, compared with 32 in the prior year.  

The company also said it was boosting dividends by 20%, to 12 cents per share, compared with 10 cents; and was authorizing a new share repurchase program totaling $500 million through Dec. 31, 2015, on top of the existing repurchase program of up to $300 million by the end of 2014.

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