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BOULDER, CO-Wild Oats Markets Inc. suffered a net loss of $1.2 million for the first quarter of 2005 that ended April 2, but the operator of 111 natural foods stores in the US and Canada gained sales and declared the quarter better than expected in a conference call Friday. The quarterly loss translated to four cents per share, compared with a profit of $2.1 million, or seven cents per share, for the first quarter of 2004. Wild Oats had previously announced that it expected to lose money in the first quarter for reasons that included its restatement of financial results in connection with changes in lease accounting, pressure on margins due to the impact of new stores on profitability, and some one-time items that walloped its bottom line to the tune of $3.2 million before taxes, or 11 cents per share. The one-time items included $1.9 million relating to asset write-offs, restructuring charges and accelerated depreciation for store closings and relocations, $600,000 in accounting and legal fees related to the lease restatement and $600,000 for the write-off of loan amortization fees as a result of the company’s terminating its former line of credit and opening a new, lower-cost line.

With the company’s loss resulting mainly from one-time charges, Wild Oats executives found much positive to say about the sales side of the company’s results in the first quarter, with overall sale rising 5.4% to $278.1 million, from $263.8 million in the first quarter of 2004. The sales increase resulted largely from the opening of 13 new stores and the relocations of two other stores during the quarter, Wild Oats president and CEO Perry Odak said in Friday’s conference call. Odak pointed out that the company achieved the sales increase despite the challenge of trying to match sales that rose dramatically in last year’s first quarter when shoppers switched to Wild Oats and other grocery stores rather than cross picket lines at supermarkets. Thanks to the gain in customers because of the strike, the first quarter of 2004 was the strongest of last year for Wild Oats. “It is important to remember that the results for almost 25% of our store base are being compared to strike-related increases in sales and margins in the first quarter of 2004,” Odak said during the conference call.

Now that the strike is over and shoppers are returning to their former patterns, however, Wild Oats faces a statistical challenge in trying to match sales figures that were unusually high last year. Comparable store sales in the first quarter of 2005 were better than expected at negative .3%, and same-store sales in the first quarter were relatively flat compared with strong 8.5% same-store sales in the first quarter of 2004. In a nutshell, despite same-store and comparable store sales that could be construed as negative, the company says it did well considering what lofty figures from last year it was up against. It noted that comparable store sales, excluding the strike-affected stores, were a positive 7% in the first quarter of 2005 compared to positive 2.9% in last year’s first quarter.

Wild Oats also reported that its square footage grew to 2.5 million sf in the first quarter, an increase of 13.6% on a year-to-year basis. The company opened three new stores and relocated one store in the first quarter. In addition to the one store that was closed and relocated in Scottsdale, AZ in January, the company closed one store early in the first quarter in Eugene, OR. Thus far in the second quarter of 2005, the company has opened one new store in April, a Henry’s Farmers Market in Temecula, CA, and relocated one store in the Portland, OR market. The Temecual opening and the Portland relocation were both “among our strongest grand openings to date,” Odak said in the conference call. With six new stores opening in the first half of the year, Wild Oats anticipates it will open between 10 and 12 new stores total in 2005. It has 16 leases and letters of intent signed for new stores scheduled to open in 2005 and 2006. Additionally, it will remodel up to nine stores in 2005.

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