Whole Foods growth stalls as other grocers go organic

  • Article by: LESLIE PATTON , Bloomberg News
  • Updated: May 6, 2014 - 8:18 PM
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Whole Foods posted second-quarter profit that trailed analysts’ estimates. It also cut its forecast for the year.

Photo: MATT ROURKE • Associated Press,

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Whole Foods Market Inc. isn’t the only place to buy organic kale anymore.

The largest U.S. natural-goods grocer Tuesday posted second-quarter profit that trailed analysts’ estimates as increasing competition from traditional supermarkets and other organic-food sellers eats into sales. It also cut its forecast for the year, sending shares down as much as 15 percent in late trading.

Whole Foods has been opening more stores and trying to lower its prices to attract more customers. At the same time, Kroger Co. is pushing organic beef and vegetable chips under its Simple Truth brand, and Sprouts Farmers Market Inc. is opening more locations in Texas and California.

Whole Foods’ net income for the quarter ended April 13 was $142 million, or 38 cents a share, about the same as a year earlier, the Austin, Texas-based company said. The average of 30 analysts’ estimates compiled by Bloomberg was 41 cents. Sales rose 9.7 percent to $3.32 billion, missing projections.

The retailer lowered its forecast for profit this fiscal year to as much as $1.56 a share, excluding certain items, compared with a previous projection of as much as $1.65.

The shares tumbled as low as $40.81 in after-hours trading after closing at $47.95.

Target Corp.’s organic and better-for-you products are “picking up steam,” Kathryn Tesija, an executive vice president, said on a conference call in February. Even Wal-Mart Stores Inc. sells some organic food, and its website has recipes and nutrition tips.

“Our tremendous success has created more competition,” Whole Foods Co-Chief Executive John Mackey said on a conference call. The natural- and organic-food market has “gotten to be a very big niche, and in some ways it has gone mainstream.”

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