LOS ANGELES (Reuters) - Whole Foods Market Inc WFMI.O said cost controls helped it post a quarterly profit that blew past analysts’ estimates on Wednesday and its shares rose 4.9 percent.
The company, which specializes in organic, natural and gourmet products, has cut jobs, reduced store opening plans, pared capital spending and suspended its cash dividend.
Whole Foods, which is known for being more expensive than supermarkets run by major operators like Kroger Co (KR.N), Supervalu Inc (SVU.N) or Safeway Inc SWY.N, for about a year has been pushing its lower-priced fare as the worst recession in decades intensifies competition among supermarket chains.
Executives said they were able to pass lower produce prices on to consumers during the latest quarter, which helped the upscale grocer promote lower prices while protecting profit margins.
Austin, Texas-based Whole Foods said net income fell to $35.3 million, or 19 cents per diluted share, for the fiscal second-quarter ended April 12 from $40.0 million, or 29 cents per share, a year earlier.
Excluding 5 cents in impairment charges, the company earned 24 cents per share. Analysts, on average, had expected earnings of 18 cents per share, according to Reuters Estimates.
Sales slipped to $1.86 billion from $1.87 billion.
Same-store sales, a gauge of financial performance that measures sales at stores open at least one year, fell 4.8 percent from a year earlier.
Identical-store sales, which excluded seven relocations and two major expansions, fell 5.8 percent, marking their third consecutive quarterly decline.
Gross profit fell 16 basis points to 34.7 percent of sales.
For the first four weeks of the current third quarter, same-store sales were down 3.9 percent and identical-store sales were down 5 percent, the company said.
In March, Whole Foods settled an antitrust battle with U.S. regulators by agreeing to sell the Wild Oats Brand, 13 functioning stores and the leases and assets for 19 closed stores.
The U.S. Federal Trade Commission had challenged Whole Foods’ 2007 purchase of smaller rival Wild Oats, saying it was concerned about loss of competition in 29 markets.
If sales trends continue as they have so far this year, the company expects full-year sales to be just under $8 billion. It had previously forecast fiscal 2009 sales of $8.3 billion.
The company repeated its forecast for full-year earnings of 71 cents to 76 cents per share, including 6 cents to 8 cents from FTC-related legal costs and about 17 cents in dilution from Series A preferred stock.
Whole Foods shares, which closed down $2.07 to $20 on Nasdaq, rose to $20.99 in extended trade.
Reporting by Lisa Baertlein; Editing by Ted Kerr, Gary Hill, Leslie Gevirtz