Whole Foods announces 3Q sales, strategic changes

AUSTIN, Texas Whole Foods reported a sales increase of 21.6% to approximately $1.8 billion for the 12-week third quarter ended July 6, 2008. Comparable-store sales increased 2.6% and identical-store sales, excluding two relocated stores and two major expansions, increased 1.9%. Net income was approximately $33.9 million and diluted earnings per share were 24 cents.

"Our business model has been highly successful and we remain very bullish on our growth prospects as the market for natural and organic products continues to grow and as our company continues to evolve," said John Mackey, chairman, ceo and co-founder of Whole Foods. "However, the challenging economic environment appears to be negatively impacting our sales. This, combined with our commitment to maintaining financial flexibility and investing prudently in our long-term growth, has led us to take a more conservative approach to our growth and business strategy over the short term."

The company will reduce the number of stores expected to open in fiscal 2009 to approximately 15 and has cut all discretionary capital expenditure budgets not related to new stores by 50%. It also has already implemented certain cost-containment measures for the remainder of fiscal 2008 and expects G&A expenses of approximately 3.2% of sales in fiscal 2009. And, finally, the company is suspending its quarterly cash dividend for the foreseeable future.

"We have not undertaken any of these difficult decisions lightly," said Mackey. "We are committed to improving our financial results and believe these proactive steps are necessary to manage through the current challenging environment, enabling us to emerge stronger and better positioned to realize our growth potential and fulfill our long-term mission and core values."