Sales Surge at Whole Foods

Whole Foods (WFMI Quote) reported a 15% drop in fourth-quarter profits, hit by charges, but the natural-foods giant recorded hefty sales gains following its purchase of rival Wild Oats.

The Austin, Texas-based company's earnings for the September quarter fell to $33.9 million, or 24 cents a share, from $39.8 million, or 28 cents a share, a year earlier.

The results were weighed down by charges of $13 million, or 6 cents a share, in costs tied to the August acquisition of Wild Oats. As well, the company recorded $23 million, or 10 cents a share, in pre-opening and relocation costs, up from $14 million, or 16 cents a share, a year earlier.

Sales rose 25% to $1.74 billion from $1.29 billion the prior year, boosted in part by five weeks of contributions from Wild Oats. Excluding Wild Oats, sales increased 16% to $1.9 billion.

Analysts, on average, projected earnings of 30 cents a share and revenue of $1.62 billion, according to Thomson Financial. Analyst estimates typically exclude acquisition-related charges.

Whole Foods' same-store sales, or sales at stores open at least a year, jumped 8.2%. Same-store sales at Wild Oats' stores were up 3.9% during the last five weeks of the quarter, and are up 6.6% quarter to date.

For the coming fiscal year, Whole Foods anticipates sales growth of 25% to 30%. About 10% of that growth is expected to come from Wild Oats.

Same-store sales are expected to rise 7.5% to 9.5% for the fiscal year ending next September.

Capital expenditures for the fiscal year are expected to be in the range of $575 million to $625 million. Of that amount, approximately 65% to 70% relates to new stores opening in fiscal year 2008 and beyond and approximately 7% to 8% relates to remodels of acquired Wild Oats stores.

Whole Foods also increased its dividend 11% to 20 cents per share. The stock was climbing $2.93, or 6.9%, to $45.18 in after-hours trading.