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Whole Foods Plunges: What Wall Street's Saying

NEW YORK (TheStreet) - Whole Foods Market WFM shares were plunging 19.5% to $38.63 after the specialty foods grocery sharply reined in expectations for the fiscal year as competition heats up, especially since Walmart (WMT) intends to be a player in the natural and organic food space.

Whole Foods shares hit an intraday 52-week-low on Wednesday of $37.31. More than 25 million shares were traded by mid-day, as investors got spooked from last night's earnings report.

Whole Foods reported second-quarter profit of $142 million, or 38 cents per share, for the 12-week period, ending April 13, below analysts' estimates. The average of 30 analysts' estimates was 41 cents a share, according to Bloomberg data.


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Sales for the quarter rose 10% to a record $3.3 billion, Whole Foods said, but once again comparable store sales growth of 4.5% slowed for the quarter compared to a 6.9% increase in last year's quarter. The company said that comps were hurt by approximately 50 basis points from the shift in the Easter holiday from the second quarter last year to the third quarter this year.

More importantly though, the Austin, Texas-based grocer slashed its annual earnings forecast, to a range of $1.52 a share to $1.56 a share from $1.58 a share to $1.65 a share, implying EPS growth for the year of just 3%-6% versus 7%-12%. Analysts estimate $1.61 per share for the year, on average.

Whole Foods now expects comparable store sales growth for its fiscal 2014 to 5-5.5% down from 5.5-6.2%. Over the long term though, Whole Foods noted that it believes that it's "growth prospects remain strong." Starting in fiscal 2015, the company's goal is to "deliver earnings per share growth equal to or in excess of sales growth." It also expects to lower gross margin to 34% to 35%.

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