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Whole Foods Market (WFM) Posts Q4 GAAP EPS of 16c; Approves New $1B Buyback Plan

November 4, 2015 4:08 PM EST

(Updated - November 4, 2015 4:08 PM EST)

Whole Foods Market (NASDAQ: WFM) reported Q4 EPS of $0.16, which may not compare with the analyst estimate of $0.35. Revenue for the quarter came in at $3.4 billion versus the consensus estimate of $3.47 billion.

Results included a non-cash asset impairment charge of $46 million, or $0.08 per diluted share, and a restructuring charge of $34 million, or $0.06 per diluted share

Comparable store sales on a constant currency basis decreased 0.2%, versus the consensus of up 0.7%.

The company also announced a new capital allocation strategy that reflects confidence in the Company's future growth and cash flow generation, while expanding its commitment to return capital to shareholders.

As part of this strategy, the Company's Board of Directors has authorized a new $1 billion share repurchase program, bringing the Company's total share repurchase authorization to $1.3 billion. In addition, the Board declared a 4% increase in the quarterly dividend to $0.135 per share from $0.13 per share, the Company's fifth consecutive dividend increase since reinstating the dividend in 2011. The next dividend is payable on January 26, 2016 to shareholders of record as of January 15, 2016. Since 2011, the Company has returned approximately $2.4 billion to shareholders through dividends and share repurchases.

As part of its capital structure strategy, the Company recently entered into a $500 million five-year revolving credit facility. In addition, prior to the end of the first quarter, the Company intends to incur additional long-term debt of up to $1 billion. The amount and composition of this debt will depend on market conditions and capital allocation considerations at the time the debt is incurred. The Company may also incur additional short-term debt of up to $350 million, which would be repaid with proceeds from the long-term debt. Proceeds from any debt incurred would be used for general corporate purposes, including the repurchase of stock. The Company's intent is to spend the majority of the $1 billion buyback authorization in the first half of the fiscal year and expects the combined effects of the additional indebtedness and future share repurchases to be accretive to earnings per share in fiscal year 2016.

"We believe this capital allocation strategy positions us to take advantage of attractive conditions in the debt markets and lower our overall cost of capital, while preserving ample financial flexibility for future growth initiatives," said Glenda Flanagan, executive vice president and chief financial officer of Whole Foods Market. "We are confident in our long-term growth strategy and continued ability to generate strong cash flow, and are pleased to be able to augment the strategic investments in our business with increased returns to shareholders through this capital allocation strategy."

Under the share repurchase program, purchases can be made from time to time using a variety of methods, which may include open market purchases. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations. Purchases may be made through a Rule 10b5-1 plan pursuant to pre-determined metrics set forth in such plan. The Board's authorization of the share repurchase program does not obligate the Company to acquire any particular amount of common stock, and the program may be suspended or discontinued at any time.

For earnings history and earnings-related data on Whole Foods Market (WFM) click here.



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