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BOULDER, Colo. -- Natural and organic grocer Wild Oats Markets, Inc. saw increased sales and comps for the third quarter ended October 1, and broke even in the profit column.
Net sales for the quarter were $278.5 million, up 11.1 percent compared with $250.7 million last year. According to Wild Oats, the sales gain was driven by continued strong comparable store sales and total square footage growth of 8 percent, as the company ended the quarter with 2.56 million square feet.
"Our sales have continued to gain momentum and accelerated in the third quarter," said Perry D. Odak, president and c.e.o. of Wild Oats. "With the new merchandising programs we introduced, continued growth in our Wild Oats branded products and improved operational execution, we expect to finish the year with strong top-line results. Additionally, we continue to improve our ability to strike a balance between sales, promotion and gross margin. And, as a result, we are raising our estimates for EPS and EBITDA for the year."
Continued strong comparable store sales, as well as the addition of five new stores, two relocated stores and two major remodels in the first nine months of 2005, helped drive the increase in net sales, said Wild Oats. Year-to-date 2005 net sales were $841.2 million, a 9.8 percent increase compared to $766.2 million in the same period last year.
Comparable store sales in the third quarter of 2005 increased 6.1 percent over last year. Comparable store sales for the first nine months of 2005 increased 3.7 percent compared to the first nine months of 2004. During the second quarter of this year, the retailer passed the final quarter of difficult comparisons to a year ago when it benefited from the Southern California strike against the conventional grocery retailers. Excluding the strike-affected stores, comparable store sales were 8.8 percent and 7.9 percent during the third quarter and first nine months of 2005, respectively. It expects comparable store sales for the full year, for all stores, to be at the high end of its previous guidance range of 3 percent to 4 percent.
Net income for the third quarter of 2005 was $82,000, or $0 per share, compared with a net loss of $7.1 million, or $0.25 per share for the same period last year. The improvements relative to the prior year were due to stronger sales and an improvement in gross margin. The net loss for the first nine months of 2005 was $148,000, or $0.01 per share, compared with a net loss of $5.3 million, or 18 cents.
Because of progress to date in achieving its profitability gains, Wild Oats increased its guidance for its full-year 2005 EPS to be in the 4 to 7 cents per share range from a previous guidance of 2 to 4 cents.
Wild Oats reported gross profit of $80.7 million in the third quarter, a 17.3 percent increase compared with $68.8 million. As a percentage of sales, gross profit improved to 29 percent compared with 27.5 percent last year. The improvement in gross margin was primarily due to the chain's ability to strike a balance between sales and promotional activity, and its implementation of new merchandising initiatives focused on improving margins.
Wild Oats generated a 10.9 percent increase in gross profit to $243.6 million, or 29.0 percent of sales, in the first nine months of 2005 compared with $219.7 million, or 28.7 percent of sales last year.
Wild Oats opened one new Henry's store in Glendale, Ariz. during the quarter. In the subsequent fourth quarter so far it has already opened its eighth and final store for 2005, a Henry's store in Rancho Cucamonga, Calif. Previously, it estimated it would open nine new stores in 2005; however, one Henry's store in the Phoenix market has been delayed into 2006. Wild Oats also completed the major remodeling of two older San Diego Henry's stores in July. Thus far in the fourth quarter, Wild Oats completed the major remodeling of stores in West Hartford, Conn. and Evanston, Ill., bringing its total number of major remodels for the year to four.
Wild Oats said it has 16 leases or letters of intent signed for new stores opening in 2006 and 2007. It operates 113 natural foods stores in 24 states and British Columbia, Canada, under the banners Wild Oats Natural Marketplace, Henry's Farmers Markets, Sun Harvest, and Capers Community Markets.