Whole Foods Munches Estimates

Updated from 5:01 p.m. EDT

Whole Foods Market (WFMI Quote) posted an 8.9% decline in third-quarter profits Tuesday as the grocery chain continued to be hit by costs to open new stores.

The results, however, topped analysts' forecasts, sending shares surging $3.66, or 9.9%, to $40.70 in after-hours trading.

The Austin, Texas-based company reported net income of $49.1 million, or 35 cents a share, for the quarter ended July 1, down from $53.9 million, or 37 cents a share, in the same period last year. Analysts projected earnings of 33 cents share, according to Thomson Financial.

Revenue jumped 13.2% to $1.51 billion from $1.34 billion a year earlier, short of analysts' forecast of $1.54 billion. Same-store sales climbed 7%.

"As expected, fiscal year 2007 has been an investment year as we have accelerated our new store openings while cycling over tough year-ago comparable store sales growth comparisons," said Chief Executive John Mackey in a statement. "We believe that our third quarter results, combined with our 7.6% comparable store sales increase in the fourth quarter to date, is an indication that our comparable store sales growth has stabilized."

Pre-opening and relocation costs were $15 million, or 6 cents a share, up from $7.9 million, or 3 cents a share, last year. Capital expenditures totaled $128 million, of which $95 million went toward new stores.