Whole Foods (WFMI) is down almost 20% this morning after an atrocious Q3 (don’t say we didn’t warn you).WFMI reported downside to both EPS ($0.24 vs. $0.31 consensus) and revenue ($1.8 billion vs. $1.9 billion consensus).
‘The premium food retailer also said, due to a weak economy, it would suspend its quarterly dividend and curb expansion plans.
Whole Foods’ guidance was awful, too. WFMI forecasted a profit of $0.13 to $0.15 a share for Q4 and $0.93 to $0.95 cents a share for the full year. The Street expected $0.27 a share for Q4 an $1.15 a share for the year.
Now, Wall Street is jumping ship:
Citi maintains HOLD, target cut from $32 to $20.
- “WFMI reported comps of 2.6%, below the 5.7% trend seen in the first 4 weeks of the qtr due to weak economic conditions, competition, and cannibalization from new stores. We think investors were probably expecting 4- 5% comps for the Q.”
- “Given updated guidance and weak margin and comp sales trends, we are lowering our ’08-’10 estimates by 21c, 51c, and 47c, respectively. Lowering tgt px by $12 given lower estimates and target multiple.”
Credit Suisse maintains NEUTRAL, target cut from $30 to $15.
- “Disappointing is an understatement…Whole Foods reported an extremely disappointing quarter and provided a sobering outlook, as the combination of a weakening consumer and mismanagement continues to plague the company.”
- “Liquidity is developing into a potential issue. WFMI generates $8 billion in sales, is junk rated and has only $130 million available under its revolver. We estimate that the company will burn cash of $75+ million in Q4 and be free cash neutral in ’09 only after eliminating its $100+ million dividend, reducing new store openings to 15 from 25-30, and cutting non-growth discretionary capex by 50%. We believe the company may need to raise capital if it fails to achieve its EPS guidance (a realistic possibility) or ultimately reaccelerates store growth.”
ThinkPanmure downgrades from Accumulate to SOURCE OF FUNDS, target cut from $26 to $19.
- Q3 was “disappointing.”
MidWest downgrades from Buy to NEUTRAL.
- Q3 results were “weak” and outlook was “disappointing.”
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