Wild Oats Markets, Inc. (NASDAQ:OATS), a leading national natural/organic foods supermarket chain, announced financial results for the first quarter.
Net of $3.5 million, or $0.12 per share, in transaction expenses related to the pending merger with Whole Foods Market, Inc. the Company generated a significant improvement in profitability.
Excluding transaction expenses, earnings per share in the first quarter of 2007 were $0.17 compared to $0.10 in the first quarter of 2006, and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) increased 13.2 percent to $15.4 million from $13.6 million in last year’s first quarter.
Reported net income on a GAAP basis for the first quarter of 2007, which includes the transaction costs, was $1.6 million, or $0.05 per share, and reported Adjusted EBITDA was $11.9 million in the first quarter of 2007. Net sales increased 3.9 percent to $309.9 million, from $298.4 million in Q106. The contribution of seven new stores opened since the end of last year’s first quarter drove the overall increase in net sales and more than offset the sales impact of nine store closures in 2006.
The Company reported a 0.3 percent increase in comparable store sales in the first quarter, compared with same-store sales of 4.1 percent in the first quarter of 2006. Wild Oats ended the first quarter of 2007 with 2.53 million total square feet under management, which represents a slight decline relative to last year due to the store closures in 2006.
“We are very pleased with our growth in profitability in the first quarter, and with the top-line momentum we are establishing in 2007,” said Gregory Mays, Chairman and interim CEO. “The merchandising and marketing programs we put in place in the first quarter are gaining traction and are driving improvement in comparable store sales in the second quarter. We will continue to implement innovative merchandising and marketing programs, and focus on improved store-level operations to drive further sales gains and an improved customer experience.”
Wild Oats reported gross profit of $99.2 million, a 2.2 percent increase compared with $97.1 million in the same period last year. Gross margin was 32 percent of sales, compared with 32.5 percent of sales in Q106. The slight decline was due to increased occupancy costs, a sales mix shift to lower-margin product categories and a more aggressive promotional schedule in 2007.
On Feb. 21, 2007, Wild Oats Markets and Whole Foods Market announced they signed a merger agreement under which Whole Foods Market offered to acquire Wild Oats Markets’ outstanding common stock in a cash tender offer at $18.50 per share, or approximately $565 million based on fully diluted shares, plus assumed debt.
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