Whole Foods Updates Outlook To Reflect Lower Expected Sales Growth

(RTTNews) - Whole Foods Market, Inc. (WFM) announced the company is updating its fiscal 2017 outlook primarily to reflect lower expected sales growth and new costs associated with accelerating the implementation of category management. The company now expects: sales growth of 1.5% or greater; Comps decline of approximately 2.5% or better; and EPS of $1.33 or greater. The company updated its sales outlook primarily to reflect year-to-date sales trends and lost sales related to the store closures.

In the first quarter, the company incurred a charge of approximately $47 million, or $0.09 per share, related to Mr. Robb's separation agreement as well as store and facility closures. In the second quarter, the company expects to incur an additional charge related to these closures of approximately $30 million, or $0.06 per share. The company noted that its outlook excludes these charges and potential share repurchases.

Whole Foods plans to reduce its cost structure in the current fiscal year but expects these savings to be more than offset by investments in marketing, value and technology, as well as higher occupancy, depreciation and other costs. In addition, the company is estimating additional costs of approximately $14 million, or $0.03 per share, related to its recent decision to accelerate the implementation of category management, the majority of which it expects to incur in the fourth quarter. Therefore, the company now expects a decline in operating margin of up to approximately 85 basis points for the year, with greater declines of up to 115 basis points in the second and fourth quarters due in part to the negative Easter shift and higher year-over-year marketing expense in the second quarter, and costs associated with category management in the fourth quarter.