Whole Foods fiscal 4Q net income up 31 percent

Whole Foods Market Inc. said Wednesday that its fiscal fourth-quarter profit rose 31 percent, beating analysts' expectations as sales rose.

But the company's outlook for next year's profit fell just short of what analysts forecast on average, and its shares fell after hours.

The natural and organic grocery store chain reported net income of $75.5 million, or 42 cents per share, up from $57.5 million, or 33 cents per share, a year earlier. Its revenue rose 12 percent to $2.35 billion.

Analysts expected net income of 41 cents per share but higher revenue -- the $2.36 billion -- according to FactSet.

For the next fiscal year, which began in the current period, the Austin, Texas-based grocer expects to earn $2.21 to $2.26 per share and revenue growth of 13 percent to 15 percent over 2011, which implies a range of $11.4 billion to $11.6 billion. Analysts were expecting $2.26 per share and revenue of $11.6 billion.

Whole Foods' shares dropped $3.14, or 4.5 percent, to $67.42 after hours. They had closed up $1.05 at $70.56.

Many analysts were worried the weak economy would crimp Whole Foods' sales both because it sells some higher-priced items that consumers can do without in tough times and because rising food costs are holding back demand. The USDA estimates food costs will rise about 4 percent for 2011 overall.

Whole Foods Chief Operating Officer A.C. Gallo said the company's costs had risen, particularly in the meat and dairy aisles.

"We've realized that we've had to be really careful ... because we don't feel like we really want to push those (prices) very much farther (onto consumers)," Gallo told investors during a conference call Wednesday.

The recession slammed Whole Foods, but it revamped its operation by cutting costs, slowing expansion and offering more lower-priced options. The strategy worked: Whole Foods' sales have risen.

That success is partly to blame for investors' disappointment with the company's most recent results, said Matt Arnold, an analyst with Edward Jones.

"Investors have become accustomed to this company blowing out the current quarter and raising the bar for the next one," Arnold said.

For all of fiscal 2011, Whole Foods reported net income of $342.6 million, or $1.93 per share, compared with $245.8 million, or $1.43 per share, in fiscal 2010. Revenue in 2011 was $10.1 billion, compared with $9 billion in 2010.

The results met analysts' expectations for net income but fell just below the $10.12 billion in revenue analysts anticipated, according to FactSet.

Whole Foods also said it boosted its dividend 40 percent to 14 cents per share and would buy back $200 million worth of its stock.