Earnings Preview: Whole Foods Market Inc.

Whole Foods Market Inc. reports earnings for the third fiscal quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Natural foods grocer Whole Foods may be facing a slowdown in sales because of weaker consumer spending. The Austin, Texas-based company has previously said its loyal customer base should help protect it from the effects of a rough economy. But shoppers already began making some lower-cost choices at high-end Whole Foods such as buying more store brands during the second quarter and have opted for lower-cost options at other grocers.

While the company has continued to grow, its comparable-store sales have slowed some in recent quarters.

Whole Foods may also discuss the recent federal court decision that overturned an earlier ruling on its acquisition of Wild Oats Markets Inc. The ruling sends the case back to the lower court for further consideration, but doesn't halt the integration or require that the deal be undone. However, if the district court ultimately rules in favor of the Federal Trade Commission, which sought last year to block the deal, it could disrupt Whole Foods' efforts to combine the businesses.

The company said it was going to evaluate all its legal options but has not given further details or potential impact on the company.

BY THE NUMBERS: Whole Foods has not offered any guidance for the quarter. Analysts polled by Thomson Financial expect a profit of 31 cents per share on revenue of $1.9 billion.

ANALYST TAKE:

RBC Capital Markets analyst Edward Aaron said in a note to investors that he remains positive about Whole Foods' long-term growth but that the macro-economic pressures prompted him to cut his outlook on the grocer.

"In this environment, we believe consumers are increasingly prioritizing value and convenience. Although somewhat misplaced in our view, consumers' perceptions of Whole Foods Market often do not align with these preferences," Aaron said.

WHAT'S AHEAD: The company continues to expect total sales to grow 25 percent to 30 percent for the year, with comparable-store sales rising 7.5 percent to 9.5 percent.

STOCK PERFORMANCE: Shares dropped nearly 47 percent during the past 52 weeks.

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