AUSTIN, Texas _ Austin-based Whole Foods Market issued a mixed third-quarter earnings report on Wednesday, missing on some Wall Street forecasts and triggering a drop in the retailer's stock in after-hours trading.
Whole Foods said it had record revenue for the quarter of more than $3.7 billion with earnings per share of 37 cents. Thomson Reuters analysts had projected revenues of $3.73 billion with earnings per share of 37 cents.
In the same quarter a year ago, Whole Foods posted earnings per share of 43 cents and $3.63 billion in revenue.
"We delivered record sales of $3.7 billion this quarter along with a sequential improvement in our comparable store sales trends," co-CEO Walter Robb said in a statement. "We are continuing to make measurable progress on fundamentally evolving our business including the successful launch of our new 365 format, expanded value investments, and increased efforts to better understand and provide personalized offers to our customers. We are seeing some encouraging signs in terms of our sales and believe our nine-point plan will produce strong returns for our shareholders over the long term."
After years as the organic foods leader, Whole Foods has seen traditional supermarkets, big-box stores and online retailers chip away at its market share. The company is one of Austin's highest-profile companies, with 86,000 workers in 453 stores worldwide and about 2,500 employees in Central Texas.
Ahead of Wednesday's report, shares in Whole Foods closed down 47 cents or about 1.4 percent to $33.64. In early after-hours trading, the stock was down $1.64 or 5 percent to $32.
The stock has a 52-week range of $28.07 to $41.75.
The retailer also said on Wednesday that same-store sales fell 2.6 percent in the quarter that ended July 3. Analysts had projected same-store sales _ a key metric in the grocery industry _ would fall 2.4 percent, according to Bloomberg News.
The retailer is coming off a challenging couple years, where the organic foods giant saw its stock fall more than 40 percent after it issued a difficult earnings report in May 2014 and missed earnings expectations several times since. The May 2014 report triggered a reckoning with Wall Street and sent Whole Foods into one of its most challenging periods in its 30-plus year history.
This year, co-CEO John Mackey has said, would be different under a new game plan.
Late last year, the retailer laid out a new nine-point plan, which included launching its new line of smaller, value-driven stores, 365 by Whole Foods Market. It has since launched two locations of its new store brand to positive reviews: A first store opened in the Los Angeles neighborhood of Silver Lake May 25 and a second store in the Portland suburb of Lake Oswego July 14.
A third location is slated to open in Bellevue, Wash., outside Seattle on Sept. 14.
"Just two weeks ago, we opened our second 365 by Whole Foods Market store. Designed around affordability and convenience and supported by enhanced digital experiences, our 365 stores deliver a fresh new format to the marketplace. Through lower capital and operating costs, we are able to offer great values to our customers, and the response has been overwhelmingly positive," Mackey said. "Our 365 stores are firsts for us in so many ways, from a streamlined operating model, to centralized buying, to auto-replenishment of inventory. We are already taking advantage of our many learnings to shape and evolve not just future 365 stores but Whole Foods Market stores as well."
In 2017, as many as 10 of the 365 stores could open.
The 25,000- to 35,000-square-foot stores will compete directly with the likes of Trader Joe's, Sprouts and other smaller format, value-focused brands.
Also as part of Whole Foods' nine-point plan, the retailer has also said it would trim its workforce and cut $300 million in expenses by 2017 as it evolves its brand and re-double efforts to get "back to basics."
The new strategy also includes raising awareness and marketing of Whole Foods' in-house brand and lower pricing, boosting its digital reach with consumers and moderating its growth.
