Whole Foods falls on 'new concept' doubts

Slowing fiscal second-quarter same-store sales and mixed reviews for a new concept store by Whole Foods Market weighed on shares of the upmarket grocer.

Whole Foods shares fell nearly 11 per cent to $42.72 after the company said same-store sales, a key industry metric, climbed 3.6 per cent on a constant currency basis in the three months to April 12.

Analysts on Wall Street had projected comparable sales to rise 5.3 per cent.

The pace of sales has moderated further in the current quarter with comparable sales in the first five weeks in Whole Food's financial third quarter up 2.8 per cent.

Management attributed the slowdown to the broader macro environment, increased competition from "explosive" demand for organic foods and severe weather.

The company also announced plans to roll out a new format store early next year, which will be targeted at "millennial" consumers.

"We see this as a capitulation," said Meredith Adler, an analyst at Barclays, of the new concept store. "Management has pointed out the current Whole Foods concept can never offer consumers a true value experience, so there is no point in trying too hard."

While she did not think the announcement was necessarily bad, Ms Adler said: "We have never seen a food retailer operate an entirely new format successfully, especially one that is so different."

The Texas-based company said profits rose 11 per cent from a year earlier to $158m, or 44 cents per share. Net sales climbed 10 per cent to $3.6bn.

Shares of Whole Foods, which have gained 9 per cent in the past year, fell nearly 11 per cent to $42.61.

Investors soured on shares of Keurig Green Mountain after the company cut its sales forecast and missed financial second-quarter profit and revenue expectations, amid a steep dive in consumer purchases of brewers and accessories.

The company said it expected third-quarter earnings to range between 75 and 80 cents a share, below Wall Street estimates for $1.08 a share.

Shares of the Vermont-based company fell 9 per cent to $98.24 and were among the biggest fallers in percentage terms on the S&P 500.

SeaWorld Entertainment shares fell 1 per cent to $21.36 after the company reported a first-quarter loss and struck a cautious note on full-year attendance.

The Florida-based company said its first-quarter loss narrowed to $43.6m or 51 cents a share. Sales rose 1 per cent to $214.6m, driven by a 5.6 per cent rise in attendance.

"Looking ahead to the remainder of the year, we remain cautious as the first quarter accounts for a relatively small portion of full-year attendance, competitive pressures remain in Orlando and our marketing and reputation campaigns are still in their early stages," said Joel Manby, chief executive.

Alibaba shares advanced 7 per cent to $85.92 after the Chinese ecommerce company's quarterly sales beat expectations and it announced a new chief executive.

The S&P 500 climbed modestly, led by a rise in utility and technology shares.

The S&P 500 rose 0.3 per cent to 2,087.17, the Dow Jones Industrial Average gained 0.4 per cent to 17,907.85 and the Nasdaq Composite climbed 0.5 per cent to 4,941.83.

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