Whole Foods Earnings Drop On Charges, Disappointing Sales Growth

(RTTNews) - Acknowledging that it is facing increased competition in the healthy food segment, grocery store chain Whole Foods Markets (WFM) revealed earnings for its latest quarter that were slashed by more than half compared to last year.

The company suffered $80 million in one-time charges during the quarter, which cut into the bottom line. Also, top line growth was disappointing, with the company's comparable store sales falling from last year.

Whole Foods also announced that its board of directors has authorized a new $1 billion share repurchase plan. In addition, the company revealed a new capital structure plan.

The health food grocery chain reported fourth-quarter net income of $56 million, or $0.16 per share. This was down from $128 million, or $0.35 per share, in the same period last year.

Whole Foods said the quarterly results included a non-cash asset impairment charge of $46 million, or $0.08 per share. There were also $34 million, or $0.06 per share, in charges related to a restructuring program.

Sales climbed to $3.4 billion, compared to $3.3 billion in last year's fourth quarter. Analysts had expected the company to show sales of nearly $3.5 billion.

The company said comparable store sales were down 0.2 percent for the fourth quarter. The figure is down 2.1 percent so far in the current quarter, Whole Foods revealed.

Comparable sales are an important stat for judging retail performance, as it strips out the impact of new store openings. The figure compares the performance of pre-existing locations.

Commenting on the results, Walter Robb, co-chief executive officer, said, "We recognize the need to move faster and go deeper to rebuild traffic and sales and create a solid foundation for long-term profitable growth."

Looking ahead, the company projected sales growth of 3 percent to 5 percent for fiscal 2016. The company also plans to add about 30 new stores for the year.

On the repurchase plan, the company said the new $1 billion authorization brings the total approval up to $1.3 billion. The company also raised its dividend by 4 percent to $0.135 per share.

In addition, Whole Foods said it has entered into a new 5-year, $500 million revolving credit facility. The company also said it intends to incur up to $1 billion in additional long-term debt.