American supermarket chain, Whole Foods Market Incorporated (NASDAQ: WFM), reported Q2 earnings of $0.44 beating consensus forecast amongst investors by $0.03 and revenue of $3.7B (+1.4% Year to year) that missed expected revenue by $40M yesterday after market close.
Whole Foods Market comparable-store sales fell 3% for the quarter marking its third conventional quarterly drop as it struggles with old-fashioned organic and natural food grocers, along with big retailers.
Updated Outlook for Fiscal Year 2016
- Sales growth of up to 3%, reflecting comps of up to -2%
- Square footage growth of 7% or greater
- EBITDA margin of approximately 8.5%
- Capital expenditures of 5% of sales
- ROIC greater than 13.5%
"As superior as Whole Foods is for fresh and wholesome foods, it remains eye-wateringly expensive," Carter Harrison, an analyst for Whole Foods Market who wrote in a recent note to clients. "Such price premiums are justified on unique and specialty items; however, on everyday items sold elsewhere there is no justification for the inflated prices Whole Foods charge — and consumers increasingly resent paying over the odds."
"The whole purpose of reducing prices should be to attract and keep more customers, with a consequent uplift to the sales line," Harrison wrote. "However, at present this dynamic is not working as effectively as it should."
Whole Foods Market shares up over 5 percent to $1.45 at 2:33 p.m. in New York.