Whole Foods share price takes an unhealthy turn as group unveils new capital strategy
Shares in healthy supermarket chain Whole Foods Market dropped by 7.31 per cent in after hours trading, as the company unveiled plans for a $1bn (£650m) share repurchase programme and revealed that same-store sales had declined by 0.2 per cent in the final quarter of its financial year.
Total sales increased by six per cent to $3.4bn, and the company also raised the quarterly dividend by four per cent to $0.135 per share.
However, net income more than halved, dropping to $56m in the fourth quarter, from $128m in the same period of last year.
The group is trying to lose its "Whole Paycheck" reputation – referencing the usually pricey nature of the goods on offer at Whole Foods stores.
Walter Robb, co-chief exec of Whole Foods, said: “There has never been a time where customers have had more interest in what they eat, where it comes from and who's growing it. Our company mission, commitment to transparency, and culture of innovation are more relevant than ever, and we see tremendous growth potential as food consciousness continues to evolve.”
The company has also announced a new capital allocation strategy, part of which will see the group take on additional long-term debt of up to $1bn before the end of the first quarter of 2016. Whole Foods said it may also incure further short-term debt of $350m, which would be repaid using proceeds from the long-term debt.
Glenda Flanagan, Whole Foods' executive vice president and chief financial officer, said: “We believe this capital allocation strategy positions us to take advantage of attractive conditions in the debt markets and lower our overall cost of capital, while preserving ample financial flexibility for future growth initiatives.”