Wild Oats Continues Recovery

"This is the strongest year-over-year quarterly sales increase that the company has generated in more than four years," Wild Oats president and CEO Perry Odak declared during Thursday's conference call with financial analysts to discuss results for the second quarter ended July 2. Odak's comment was a reference to a gain of 13.1% in net sales, which totaled $284.6 million for the quarter.

Wild Oats, which endured some lean financial times before turning in a positive direction in the first quarter, listed a series of financial improvements for the latest quarter. Among them were net income of $900,000, or three cents per diluted share, compared with a loss of $300,000, or a penny a share for the second quarter last year.

Comparable store sales grew 5.4%, and Odak said during the conference call that the comp sales represented an even better achievement than the numbers indicated. He explained that comp sales this year were competing against sales increases during the Southern California supermarket strike.

During the strike, virtually all chains other than those where workers were striking posted big same store sales when shoppers flocked to their markets to honor picket lines. Excluding the Southern California stores, Odak elaborated, same store sales at Wild Oats climbed 7.9% during the quarter.

Odak said that sales grew in the second quarter in part as a result of the opening of four new stores and the relocation of two stores in the first half of 2005. The company expects comparable store sales for the full year to be at the high end of its previously stated estimate of 3% to 4%.

Despite the improved financial performance of the second quarter, Odak pointed out that net income in the quarter was adversely affected by approximately $1 million before taxes, or three cents per share, as a result of restructuring charges and accelerated depreciation for store closings. The company opened one new Henry's store in Temecula, CA and relocated a Wild Oats store in the Portland, OR market in the second quarter, producing strong grand opening results that helped to boost sales in the quarter.

The company plans to open three new Henry's stores this year, bringing the total number of new stores opened in 2005 to nine. It also has 17 leases or letters of intent signed for new stores opening in the remainder of this year, in 2006 and in 2007. Odak said a couple of store openings planned for the fourth quarter have been set back by construction delays, but the chain's expansion will proceed as planned.