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Non-Tech : Natural/Health Food Industry Stocks -- Ignore unavailable to you. Want to Upgrade?

To: A. Wayne who wrote (171)	1/14/1999 4:45:00 PM
From: Beltropolis Boy	Read Replies (1) \| Respond to of 337

>This doesn't happen overnight and was no surprise to management, unless they are totally stupid. Somebody's (or plural) head should roll for this kind of inept management. certainly disappointing. it's not like we're in a fucking recession. top brass must've been on autopilot. too many phish shows taking their toll? (over)dosing on neo-hippie st. john's wort? over-application of patchouli oil? indeed, someone needs to take a bath. as rationale, first mackey invoked 'psychology' and now 'decentralization.' who is this guy? marion barry? where's a goddamn union when you need one? can you say "financial board?" ----- Whole Foods Shares Fall After 1st-Qtr Profit Warning Bloomberg News January 14, 1999, 12:05 p.m. PT Austin, Texas, Jan. 14 (Bloomberg) -- Whole Foods Market Inc.'s shares fell as much as 26 percent after the biggest U.S. natural-foods grocer said higher costs hurt fiscal first-quarter earnings and it warned of slower profit growth for the year. The shares fell 9 1/2, or 21 percent, to 35 in late trading of 6.1 million, more than six times the three-month daily average. Whole Foods earlier fell to 33, the stock's biggest one- day drop since the retailer went public in 1992. Whole Foods, which markets natural foods and nutritional supplements, said great-than-expected labor costs will hurt profit in the quarter ending Jan. 17. The company also warned of slower earnings growth for the rest of fiscal 1999, which analysts blamed on costs tied to the retailer's rapid expansion. The 87-store chain has another 29 supermarkets under development. ''This is what I'd call a growing pain,'' said Standard & Poor's analyst Robert Izmirlian, who rates Whole Foods ''hold.'' The company is ''building up infrastructure'' and ''not building up the revenue to go with it,'' he said. The company said late yesterday said it expects profit of 45 cents to 50 cents a share in the first quarter, less than the 58-cent average estimate of analysts polled by First Call Corp. It earned 48 cents in the year-earlier first quarter. The Austin, Texas-based grocery chain told analysts on a conference call that per-share earnings growth for the remaining three quarters of 1999 would be 8 percent to 14 percent. That's less than earlier guidelines of 18 percent to 22 percent, Izmirlian said. Whole Foods also operates stores under the Bread & Circus and Wellspring Grocery banners. Its stores sell premium-priced products such as free-range chickens, milk made from cows without bovine growth hormones, prepared foods and specialty items such as organic wines. It also sells vitamins and supplements. Labor Costs Whole Foods blamed its quarterly shortfall on higher-than- expected labor costs such as salaries and benefits. The retailer's decentralized management structure allowed overtime and scheduling to go unchecked, the company told analysts. ''Labor got out of control,'' said Allan Hickok, a Piper Jeffrey Inc. analyst who cut his rating on the shares to ''neutral'' from ''strong buy.'' Whole Foods gives regional managers flexibility with labor guidelines, allowing them to vary from market to market. The company declined to say how it will resolve the problems. ''It's one of the weaknesses of the decentralized system,'' Chief Executive John Mackey said on the teleconference. ''The strength is that those actions can be solved at the local level.'' Analysts said the changes are unlikely to take the form of job cuts; they expect cost reductions through reduced hours. Whole Foods has grown through both opening stores and acquisitions. Its purchase of Rockville, Maryland-based Fresh Fields Inc. in late 1996 added 22 stores, boosting its size by about a third. The company has said it expects to have about 200 stores by 2003. Long-term Outlook Analysts remain upbeat about the retailer's prospects. ''Long term, this is a great format,'' said Hickok, emphasizing the strength of Whole Foods' market niche and its expansion potential. ''Short term, they're going to have to regain investor confidence.'' It operates in 19 states and the District of Columbia. Sales at Whole Foods are in line with expectations, the company said. Sales in the quarter are expected to be about $455 million, with sales at stores open at least a year increasing 6.4 percent for the first 15 weeks of the 16-week period. So-called same-store sales are lower than they had been earlier in the year, Hickok said. Several analysts downgraded Whole Foods today. Sharon Pearson at Morgan Stanley Dean Witter downgraded the company to ''neutral'' from ''outperform,'' while Sandhya Raju at Merrill Lynch & Co. cut the company to near-term ''neutral'' from near- term ''accumulate.'' Whole Foods said it expects to release its results after the close of trading Feb. 16.