Whole Foods Market (WFM) was downgraded by JPMorgan Chase & Co. to a "neutral" rating in a note issued to investors on Thursday, said the Ticker Report. Whole Foods reported earnings that beat analysts' expectations on Wednesday, but shares of the stock plunged early in the day as quarterly revenue and comparable store sales trailed Wall Street estimates. The company posted fiscal third-quarter earnings of 41 cents per share, up from 38 cents a share in the year-earlier period. Revenue increased to $3.38 billion, from $3.06 billion a year ago.
Wall Street had expected Whole Foods Market to deliver earnings of 39 cents a share on $3.39 billion in revenue, according to a consensus estimate from Thomson Reuters.
Looking forward, the retailer said it expects fiscal 2014 sales growth of between 9.6 percent and 9.9 percent, versus Wall Street expectations of 11 percent revenue growth for the fiscal year, according to a consensus estimate from Thomson Reuters.
Shares of Whole Foods Market dropped 4 percent after the bell on Wednesday as investors digested disappointing quarterly results. This is the fourth consecutive quarter that Whole Foods has reported weaker-than-anticipated results, which is the main reason why shares are down 30 percent over the past twelve months.
The organic market space has become more competitive with entrants like Sprouts Farmers Market, The Fresh Market and Fairway adding stores while legacy grocers like Kroger and Safeway add organic offerings. One analyst sees a buying opportunity. "After this quarter, I am lowing that entry to point to $30-$32. WFM is still a sell here after yet another disappointment," said an analyst on Seeking Alpha.
Walter Robb III, Co-Chief Executive Officer of Whole Foods Market, Inc. since May 2010, believes the future is bright. Robb said in a conference call with analysts, "We are the leading retailer of fresh, healthy natural and organic foods, offering the highest quality standards and an unparalleled shopping experience. Millions of people place their trust in us each day because of the transparency we offer about the products we sell, such as 5-Step Animal Welfare ratings in meat, Eco-Scale ratings for cleaning products, sustainability ratings in seafood, and GMO labeling."
Robb also announced "This fall, we will raise the bar another level with the launch of our Responsibly Grown rating system for produce and flowers."
Whole Foods is on track to add 38 new stores this year, which is in addition to the 33 new stores added for the past four quarters. In Chicago, the question has been raised: Will this "bad news" impact the proposed store in the Englewood neighborhood on Chicago’s South Side?
Mayor Rahm Emanuel's communications staff have said consistently that the project was "still on track." A spokesperson for Whole Foods added, “Still business as usual" to the inquiry from the Chicago Finance Examiner about the impact of this "bad news" on the expansion into the Englewood community.