You are here
BOULDER, Colo. and CARTERET, N.J. - National natural and organic foods retailer Wild Oats Markets, Inc. and regional supermarket chain Pathmark Stores, Inc. yesterday both downwardly revised their guidance for fiscal 2004.
Comparable-store sales for Wild Oats in the third quarter of 2004 are expected to be within the range earlier communicated of flat to slightly negative. However, higher-than-anticipated investments made in pricing and promotions to grow sales in regions affected by ongoing competitive activity -- mainly in Southern California and Texas -- and the impact of new stores caused third-quarter gross margin to fall to 27.5 percent from 29.1 percent in the second quarter of 2004. Also, noncash restructuring charges, combined with the close of one store and other nonrecurring charges, are expected to add between eight cents and 10 cents to the loss per share in the quarter.
Due to these factors, Wild Oats now expects 2004 third-quarter loss to be between 20 cents and 22 cents per share. As communicated earlier, fourth-quarter comparable-store sales are expected to be -4.0 percent to -5.0 percent as the Southern California stores cycle strong results in 2003 connected with the Southern California strike/lockout. Same-store sales for the full year are expected to be 1.0 percent to 1.5 percent. As a result of continued promotional activity into the fourth quarter, the company expects gross margin to be approximately 28.0 percent for the full year and the net loss for the full year to be between 13 cents and 17 cents per share. On Nov. 4, Wild Oats will report full financial results for the third quarter of 2004.
In August the retailer said it expected to report full-year net income of 20 cents to 24 cents a share.
Pathmark -- which currently operates 142 stores mainly in the New York -- New Jersey and Philadelphia metropolitan areas -- now expects fiscal 2004 same-store sales to land within a range between a decrease of 1.0 percent and flat, net loss per diluted share to be in a range between 13 cents and 25 cents and FIFO EBITDA to be in a range between $140 million and $146 million.
Previously Pathmark's guidance was same-store sales growth of flat to up 1.0 percent, net earnings per diluted share of 0 cents to 20 cents and FIFO EBITDA between $154 million and $165 million.
The company indicated that its previous guidance had been based on the expectation of positive same-store sales in the third and fourth quarters of fiscal 2004. Based on recent results, Pathmark now expects same-store sales to be negative for the third quarter and believes this weak trend will continue in the fourth quarter.
"The same-store sales increases we achieved in the second quarter did not carry over into the third quarter, even as we increased promotional spending in certain departments," said Pathmark c.e.o. Eileen Scott. "We have adjusted our promotional and advertising programs to be better aligned with our current sales expectations. In addition, we are evaluating a number of expense-reduction initiatives at both store and administrative levels. We also are reassessing our marketing strategy as well as our preliminary 2005 capital expenditure plan to ensure that they are in line with anticipated operating results. We will provide additional details when we report our financial results for the third quarter on Dec. 2."
The company continues to expect that total capital expenditures for fiscal 2004 will be $105 million, most of which has already been committed. Pathmark noted that the company's liquidity remains strong with approximately $80 million available under its new $250 million senior secured credit facility, and that despite the company's revised guidance it expects to be in compliance with all covenants in that facility.