Whole Foods lowers sales forecast on price cuts


By Phil Wahba

Nov 6 (Reuters) - Whole Foods Market Inc onWednesday lowered its sales forecast for fiscal 2014, citingprice cuts to keep up with competitors, and shares fell 9.5percent in after-hours trading.

Expectations were high ahead of the company's fiscalfourth-quarter report, in part because the upscale grocer'ssales trends tend to mirror those of Starbucks Corp,which reported strong results for the latest quarter.

But Whole Foods has had to match prices of rivals as agrowing number of retailers, including Kroger Co, CostcoWholesale Corp, Target Corp and even Wal-MartStores Inc have increased their offerings of fresh andorganic food, pressuring the grocer.

"It's coming from all directions," Morningstar analyst KenPerkins said.

Overall sales rose 2.2 percent to $2.98 billion. Wall Streetanalysts were expecting $3.04 billion, according to ThomsonReuters I/B/E/S.

Same-store sales, a key gauge of performance for retailers,rose 5.9 percent for the fiscal fourth quarter ended Sept. 29,the slowest pace of the year and below the 8 percent pace WallStreet got used to in recent years.

Those comparable are up 5.8 percent so far.

Whole Foods executives took umbrage at the suggestion thatslower growth reflected a deeper problem for the company.

"The fundamentals are the same. There's nothing broken aboutthe growth story," co-Chief Executive Officer Walter Robb toldReuters, citing the company's recent store openings and plans toeventually have 1,000 U.S. stores, compared with 367 now.

Austin, Texas-based Whole Foods, the largest U.S. naturaland organic grocery chain, lowered its same-store sales growthfor fiscal 2014 by 1 percentage point on both ends of the rangeto a rise of 5.5 percent to 7 percent.

The company lowered prices in a number of categories in thelast two quarters and Robb told Reuters there was room for morein the perishable foods category.

It also lowered its profit forecast to a range of $1.65 to$1.69 per share from an earlier range of $1.69 to $1.72.

Net income rose to $121 million, or 32 cents per share, from$113 million, or 30 cents last year, and 1 penny better thanWall Street expected.

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