UPDATE 2-Whole Foods posts lower profit but beats by penny

(Adds quotes from conference call, background, updates shares, adds byline)

By Alexandria Sage

LOS ANGELES, Feb 19 (Reuters) - Whole Foods Market Inc (WFMI.O: Quote, Profile, Research) on Tuesday posted a lower fiscal first-quarter net profit that beat Wall Street estimates by a penny, as sales rose slightly more than expected.

The company also reaffirmed its sales outlook for 2008, but said it does not expect operating leverage during the year.

The natural and organic food seller had net income of $39.1 million, or 28 cents per share, in the quarter ended Jan. 20, compared with $53.8 million, or 38 cents per share, a year earlier.

Charges related to its $565 million acquisition of rival Wild Oats in August lowered the earnings by about 8 cents per share, Whole Foods said. Excluding that cost, earnings were 36 cents per share.

On that basis, analysts, on average, had been expecting the food retailer to post adjusted earnings of 35 cents, according to Reuters Estimates.

Sales rose 31 percent in the quarter to $2.5 billion, slightly above the $2.4 billion expected by Wall Street, on average.

Whole Foods bought Wild Oats in August in a bid to compete more effectively in a market where more mainstream grocers are expanding their offerings of organic, natural and prepared foods.