Whole Foods Income Off Sharply

Austin Whole Foods Market said Tuesday that its third-quarter net income dropped more than 30% largely due to costs associated with its acquisition of Wild Oats and a tough economy that hurt consumer spending.

The company earned $33.9 million for the three months ending July 6, down from $49.1 million in the same quarter last year. It estimates that the purchase of Wild Oats was responsible for a $4.9 million impact on the net income.

“Today's economic environment is the most challenging I have experienced in my 30 years in retail," said Whole Foods CEO John Mackey.

Whole Foods reported revenue of $1.84 billion for the quarter, up from $1.51 billion in the previous year.

The company lowered its outlook for 2009, saying it now expects sales growth of 6% to 10% for the year—rather than the previously stated 25% to 30% growth. It also said its same-store sales are expected to grow 1% to 5%, down from the previously anticipated growth of 7.5% to 9.5%.

The company said it is making several cost-cutting steps, including reducing the number of stores it plans to open in 2009 and suspending its quarterly dividend for the foreseeable future.

Executives remained positive about long-term possibilities, saying the acquisition of Wild Oats Market Inc. and strategic investments should pay off.

"We remain very bullish on our growth prospects as the market for natural and organic products continues to grow and our company continues to evolve," Mackey said.