Advertisement
YOU ARE HERE: LAT HomeCollections

CALIFORNIA

Wild Oats Earnings Sink After Rivals' Strike Ends

The chain lowers its forecast for the year. The company's stock price tumbles 29%.

August 04, 2004|Dawn Wotapka | Times Staff Writer

The fallout from the state's grocery strike continues.

Organic- and natural-food grocer Wild Oats Markets Inc. on Tuesday cited post-strike competition as one of the reasons it missed its fiscal second-quarter expectations and lowered its earnings forecast for the year.

The Boulder, Colo.-based company's stock fell 29% on the news.

In the quarter ended June 26, Wild Oats earned $363,000, or 1 cent a share, compared with $2.18 million, or 7 cents, a year ago. Analysts had predicted an average of 7 cents.

Net sales increased 3.9% to $251.7 million.

The company revised its annual earnings estimate to 20 to 24 cents a share, down from the 32 to 36 cents it previously estimated.

"It was just a bad quarter, there's no way around it," said Jason Whitmer, an analyst with Midwest Research who rates the stock a "buy."

Much of the problem came from lower-than-expected sales in the chain's 22 Southern California stores, he said.

During the state's 4 1/2 -month grocery dispute that ended Feb. 29, many shoppers ventured to smaller chains such as Wild Oats, boosting first-quarter sales. But after the strike, bigger grocers employed "very aggressive promotional activity" to woo back customers, Wild Oats said. That's partly why second-quarter traffic fell 2.9%, it said.

"They need to get back on plan with sales," Whitmer said.

Wild Oats, which has 106 stores in the U.S. and Canada, also mentioned the cost of a new Riverside distribution center and lower sales at older stores competing with newer Wild Oats stores nearby.

The issues are "short term," said Chief Executive Perry D. Odak. He promised "improved results over time."

The company is replacing and closing some of its outdated stores. Up to 20 new stores are planned for 2005. Wild Oats also is testing branded shops within Stop & Shop Supermarket Co., a Northeastern chain, and experimenting with online retailing in Chicago.

Shares of Wild Oats fell $3.58 to $8.87 on Nasdaq. It fell an additional 21 cents in after-hours trading.

Advertisement
Los Angeles Times Articles
|
|
|