"The best way to characterize 2004 is we overcame several challenges at the same time that we instituted a significant amount of change," Wild Oats CEO Perry Odak said during Tuesday's conference call. Those changes "put pressure on our business and reduced our short-term potential for profitability," Odak said, but with those changes behind it the company is positioned to "turn Wild Oats Markets around" and to "produce profitable growth in 2005."
Among the changes that adversely affected profits in 2004 were changes in distributors and the start-up of a perishables distribution center, according to Odak. Gross profit suffered in the fourth quarter from higher-than-expected redemptions on a customer rewards program during the holidays, he said, although the new advertising and promotional programs in the fourth quarter generated strong sales growth that continued throughout the fourth quarter and into the first quarter. Odak said that the company is now ready to "focus on optimizing our existing stores while, at the same time, meeting our new store objectives" in 2005. The Wild Oats CEO said the company expects to open up to 12 new stores in 2005, with 21 leases and letters of intent signed for new stores scheduled to open in 2005 and 2006. These 12 include a Wild Oats store in Scottsdale, AZ and one in Salt Lake City that have already been opened this year. Also this year, the company expects to complete major remodels of up to 10 stores. These follow the addition of addition of 12 new stores in 2004, which included seven Wild Oats and five Henry's Farmers Market locations.
The company's 2004 net loss included $6.3 million, or 15 cents per share, after tax, in non-cash charges related to charges associated with correcting some administrative practices relating to its 401k retirement plan dating back to 1999. The fourth quarter loss compared with net income of $829,000, or 3 cents per share, in the same period last year. The full year loss compared with a profit of $3.6 million, or 12 cents per share, in 2003.
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