Whole Foods Earnings: What Wall Street Is Saying

NEW YORK (TheStreet) -- Whole Foods (WFM) shares fell 5.4% to $36.99 in the first hour of trading Thursday after the Austin, Texas-based grocer reported quarterly earnings above Wall Street's expectations, while at the same time disappointing on quarterly same-store sales numbers and, once again, lowering the sales outlook as it faces intense competition in the natural and organic food industry.

The company reported Wednesday after the bell fiscal-third quarter earnings per share of 41 cents, beating consensus estimates of 39 cents a share and above the 38 cents a share it reported in the year-earlier period. Whole Foods' top line sales of $3.38 billion for the quarter were just slightly below consensus estimates. Comparable store sales -- which measures sales growth by stores open more than a year -- rose just 3.9% in the quarter, well below the 7.5% in last year's period and short of the 4.6% expected by analysts.

Whole Foods lowered its guidance for sales growth for fiscal 2014. For the full year, the company now expects comparable store sales to rise between 4.1% and 4.4%, down from 5% to 5.5%, previously. For its fiscal fourth-quarter Whole Foods expects sales comps to rise between 2.5% to 3.5%. Whole Foods narrowed its guidance for full-year EPS to $1.52-$1.54 a share.

Here's what Wall Street is saying about Whole Foods this morning.

Ken Goldman, JPMorgan Chase (downgrading to Neutral from Overweight; $38 PT)

For the fourth straight quarter, management lowered guidance. While we appreciate that competitive dynamics are changing in this industry, we think it is fair when examining current guidance to ask how accurate recent company forecasts have been. Perhaps more importantly, management chose not to support the near-term portion of its "strategic vision" (soft guidance that was only introduced a quarter ago), saying merely that its long-term (FY18?) goals remain intact. We would not be surprised if official FY15 guidance, likely issued with the 4Q14 results in a few months' time, is well below the $1.74 pointed to last quarter. We also note that unlike other companies we cover, management and IR generally are not available for follow-up calls with sell side analysts post earnings, which from our seat makes it difficult to gain clarity on outstanding questions regarding strategy, et al.

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