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    Wild Oats Markets sees growth potential

    DENVER -- Wild Oats Markets Inc. sees a potential to grow to 450 to 500 stores in the United States, versus 102 now, said Chief Financial Officer Edward Dunlap on Tuesday.

    DENVER -- Wild Oats Markets Inc. sees a potential to grow to 450 to 500 stores in the United States, versus 102 now, said Chief Financial Officer Edward Dunlap on Tuesday.

    "We have a significant growth opportunity in a large and highly fragmented market," said Dunlap, in a Webcast presentation at an investor conference in Long Beach, Calif., held by the Boulder, Colo.-based natural foods grocery chain.

    Wild Oats now has 3 percent of the total market, while a "national competitor," referring to Whole Foods Market Inc. has 7 percent, according to one of Dunlap's slides. Three-quarters of the U.S. market is "unpenetrated by either one of us," he said.

    When Wild Oats hits its stride, it will be developing 25 new stores a year, said Dunlap. Providing guidance that was in line with projections provided last August, he said that Wild Oats anticipates opening up to 10 stores in 2003, up to 20 stores in 2004, and up to 25 stores in 2005.

    The company has signed 21 leases or letters of intent in 11 markets. Of those 21 new stores, 12 stores will be under its Wild Oats brand and nine farmer's market-type stores under its Henry's Marketplace brand, he said. That takes care of all the new openings for 2003 and half the new openings for 2004, he said.
    The company has budgeted $3.5 million in preopening spending for 2003 on the 10 stores, with expenditures targeted to public relations programs, direct mail, fliers, and radio advertising.
    In addition, Wild Oats plans to remodel up to 20 stores in 2003 and up to 18 stores in 2004, said Dunlap.
    The new stores will be larger than the average size of the company's stores now, which is 21,000 square feet. New Wild Oats stores will be between 26,000 and 28,000 square feet, while new Henry's stores will be between 23,000 and 25, 000 square feet, said Dunlap.

    The layouts will follow the prototype Wild Oats store in Long Beach, Calif. and the prototype Henry's Marketplace in Costa Mesa, Calif. The Long Beach store is seeing sales per square foot that are 20.9% higher than the average company store.
    Chief Executive Perry Odak reiterated in his slide presentation earnings guidance of 36 cents to 40 cents per share for 2003 and 80 cents to 90 cents per share by 2005.

    About 20 percent of Wild Oats' business is in its "Natural Living" division, which features items such as vitamins and mineral supplements, and the company believes there is the opportunity to expand that higher-margin business, executives said Tuesday.
    Only 9 percent of Wild Oats customers use it as their primary store, according to Odak. A key company objective is to raise that percentage through better stores, better customer service, and building brand awareness.

    Part of the strategy is building an association with the community through events such as Easter egg hunts, donations in time and money to the community, and convenient locations.

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