Whole Foods acquisition crimps profit, shares fall

LOS ANGELES (Reuters) - Whole Foods Market Inc (WFMI.O: Quote, Profile, Research, Stock Buzz) on Tuesday posted lower quarterly net profit, missing analysts' estimates by a penny, as it booked charges related to its $565 million acquisition of rival Wild Oats Markets in August.

Despite a 28 percent rise in sales during the quarter, the natural and organic foods seller left its fiscal 2008 sales outlook unchanged, and shares fell 8.6 percent in after-hours trade.

The Austin, Texas-based company had fiscal second-quarter net income of $40.0 million, or 29 cents per share, compared with its year-earlier net income of $46.0 million, or 33 cents per share.

Analysts, on average, had been expecting net earnings of 30 cents, according to Reuters Estimates.

Charges related to its Wild Oats acquisition lowered earnings by about 6 cents per share, Whole Foods said.

Revenue rose nearly 28 percent in the quarter to $1.9 billion, matching Wall Street estimates, on average, while sales at established stores rose nearly 7 percent. Sales from Wild Oats stores contributed some 9 percent of total sales.

Identical store sales, excluding four relocated stores and two major expansions, rose 5 percent, the company said.

Whole Foods bought Wild Oats to strengthen its market position as mainstream grocers begin carrying more organic, natural and prepared foods.

The company reiterated a fiscal 2008 outlook it gave in February of total sales growth of 25 to 30 percent, and same-store sales growth of 7.5 to 9.5 percent.  Continued...