FOR IMMEDIATE RELEASE Tuesday, July 27, 1999
WILD OATS MARKETS, INC.
REPORTS SECOND QUARTER OPERATING RESULTS;
ACQUIRES 11 NATURAL FOODS MARKETS IN SAN DIEGO
The Company will host a conference call to discuss this press release on
Wednesday, July 28, 1999 at 9:00 a.m. MDT. To participate, call (212) 346-6475,
reservation #12646904. A recorded version of the call will also be available
through 5:00 p.m. MDT on Thursday, July 29, 1999 by calling (800) 633-8284 and
referencing the reservation # above.
BOULDER, CO - Wild Oats Markets, Inc. ("Wild Oats" or the "Company") today
reported operating results for its second fiscal quarter ended July 3, 1999. The
Company also announced the pending acquisition of 11 natural foods supermarkets
in San Diego.
Sales for the second quarter of 1999 were $135.3 million, an increase of 37%
over sales of $98.7 million for the same period in 1998. Sales for the six
months were $257.8 million, an increase of 36% over sales of $190.3 million for
the same period in 1998. The sales increases reflect the opening or relocation
of five stores and the acquisition of 13 stores in the first half of 1999.
Comparable store sales increased 8% for the second quarter, based on new,
relocated and acquired stores that have been operating longer than 12 months.
Net income for the second quarter of 1999 increased 22% to $3.4 million from
$2.8 million, exclusive of non-recurring charges, in the same period in 1998,
and diluted earnings per share for the second quarter of 1999 increased 19% to
$0.25 from $0.21 per share, exclusive of non-recurring charges, in the same
period in 1998. Net income for the six months, exclusive of non-recurring
charges, increased 24% to $6.8 million from $5.5 million in the same period in
1998, and diluted earnings per share for the six months, exclusive of
non-recurring charges, increased 22% to $0.50 from $0.41 in the same period in
1998.
Commenting on the Company's performance, CEO Mike Gilliland said, "Wild Oats has
delivered another strong quarter, and we are particularly pleased with our
better-than-expected earnings performance. We expect to continue to accelerate
our sales growth through very strong new store openings and successful
integration of our recent acquisitions."
Wild Oats has signed an agreement to acquire all of the outstanding stock of
Henry's Marketplace ("Henry's"), which operates 11 natural foods markets in San
Diego, in a stock-for-stock exchange valued at approximately $46 million. The
number of shares issued by Wild Oats in this transaction will be based on the
average price of the Company's common stock in the 10 trading days preceding
closing, subject to a pricing collar between $26 and $32 per share. The
transaction is expected to close on September 1, 1999 and is intended to qualify
as a pooling of interests for financial accounting purposes. The Henry's stores
average 18,100 square feet and are full-service natural foods supermarkets
specializing in produce. The stores will continue to operate under the Henry's
name.
Commenting on the acquisition, CEO Mike Gilliland said, "The Henry's stores are
an excellent addition to the Wild Oats family of natural foods markets. They
have a very loyal customer base, great name recognition and are the premier
providers of high-quality, unique, and local produce in the San Diego market. We
are very excited about expanding the Henry's concept in San Diego and other
cities around the country. With the incremental $100 million in revenues that
the Henry's stores will contribute next year, we expect that Wild Oats will be
at a billion dollar revenue run-rate by the end of 2000."
The Company has recently located sites for new stores in Southern California,
South Florida, and Oregon. Wild Oats currently has 20 sites (17 new stores and
three relocations) under development with projected opening dates as follows:
Projected
Site Name Opening Date
- -------------------------------------------
1. Albuquerque, NM Q3 99
2. Madison, NJ Q3 99
3. Phoenix, AZ Q3 99
4. Nashville, TN Q4 99
5. Tulsa, OK Q4 99
6. West Hartford, CT Q4 99
7. Cincinnati, OH 2000
8. Cleveland, OH (2 sites) 2000
9. Kansas City, MO 2000
10. Long Beach, CA 2000
11. Las Vegas, NV 2000
12. Oregon 2000
13. Reno, NV 2000
14. St. Louis, MO (2 sites) 2000
15. Salt Lake City, UT 2000*
16. South Florida (2 sites) 2000*
17. Southern California 2000
18. Westport, CT 2000
* Relocation
Wild Oats Markets, Inc. is the second largest natural foods supermarket chain in
North America. The Company currently owns and operates 78 stores in 20 states
and British Columbia. The Company's shares are traded on the NASDAQ National
Market System under the symbol "OATS". For additional information, please
contact Mary Beth Lewis, Chief Financial Officer, at (303) 440-5220.
Except for the historical information contained herein, this news release
contains forward-looking statements that involve risks and uncertainties,
including, but not limited to, the integration of prior or potential future
acquisitions, the timing and execution of new store openings, the impact of
competition, and general industry or business trends or events, as well as the
other risks detailed from time to time in the Company's SEC reports, including
the reports on Form 8-K for the period ended May 29, 1999, Form 10-Q for the
fiscal quarter ended April 3, 1999, and the Annual Report on Form 10-K for the
fiscal year ended January 2, 1999.
Wild Oats Markets, Inc.
Consolidated Statement of Operations
(In thousands, except per-share amounts)
(Unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 3, 1999 June 27, 1998 July 3, 1999 June 27, 1998
Sales $ 135,337 100.0% $98,663 100.0% $ 257,846 100.0% $ 190,266 100.0%
Cost of goods sold and occupancy costs 93,150 68.8% 67,877 68.8% 178,006 69.0% 130,824 68.8%
Gross profit 42,187 31.2% 30,786 31.2% 79,840 31.0% 59,442 31.2%
Direct store expenses 29,712 22.0% 21,948 22.2% 56,819 22.0% 42,249 22.2%
Store contribution 12,475 9.2% 8,838 9.0% 23,021 8.9% 17,193 9.0%
Selling, general and administrative expenses 4,338 3.2% 3,532 3.6% 8,269 3.2% 7,007 3.7%
Pre-opening expenses 937 0.7% 432 0.4% 1,600 0.6% 0.5%
981
Amortization of goodwill 550 0.4% 324 0.3% 1,000 0.4% 0.3%
620
Non-recurring charge 393 10,894 4.2% 0.2%
393
Income from operations 6,650 4.9% 4,157 4.2% 1,258 0.5% 8,192 4.3%
Interest expense (income), net 551 0.4% (140) -0.1% 641 0.2% -0.3%
(524)
Income before income taxes 6,099 4.5% 4,297 4.4% 617 0.2% 8,716 4.6%
Income tax expense 2,723 2.0% 1,693 1.7% 258 0.1% 3,408 1.8%
Income before cumulative effect of
change in accounting principle 3,376 2.5% 2,604 2.6% 359 0.1% 5,308 2.8%
Cumulative effect of change in accounting
principle, net of taxes 281 0.1%
Net income $ 3,376 2.5% $ 2,604 2.6% $ 78 $ 5,308 2.8%
Basic net income per common share $ 0.26 $ 0.20 $ 0.01 $ 0.41
Weighted average number of
common shares outstanding 13,184 12,997 13,138 12,954
Diluted net income per common share $ 0.25 $ 0.19 $ 0.01 $ 0.39
Weighted average number of
common shares outstanding 13,577 13,488 13,509 13,440
Excluding non-recurring charge and
cumulative effect of change in accounting
principle:
Diluted net income per common share $ 0.21 $ 0.50 $ 0.41
Weighted average number of
common shares outstanding 13,488 13,509 13,440