Whole Foods 3rd Qtr 2008 Earnings Misses, Lowers Guidance

Whole Foods Market Reports Third Quarter Results;
Company Announces Conservative Growth and Fiscal Strategy Over the Short Term,
Remains Bullish on Long-Term Growth Prospects

August 5, 2008. Whole Foods Market, Inc. (NASDAQ: WFMI) today reported results for the 12-week third quarter ended July 6, 2008. Sales increased 21.6% to approximately $1.8 billion. Comparable store sales increased 2.6%, and identical store sales, excluding two relocated stores and two major expansions, increased 1.9%. Net income was approximately $33.9 million, and diluted earnings per share were $0.24. The Company estimates the negative impact on
net income from Wild Oats was approximately $4.9 million, or $0.03 per diluted share, in the quarter. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) were approximately $122 million, and earnings before interest, taxes, depreciation and other non-cash expenses (“EBITANCE”) were approximately $135 million. Approximately $71
million relating to depreciation and amortization, share-based payments, LIFO and deferred rent was expensed for accounting purposes but was non-cash.

“Our business model has been highly successful, and we remain very bullish on our growth prospects as the market for natural and organic products continues to grow and as our company continues to evolve; however, the challenging economic environment appears to be negatively impacting our sales,” said John Mackey, chairman, chief executive officer, and co-founder of Whole Foods Market. “This, combined with our commitment to maintaining financial flexibility and investing prudently in our long-term growth, has led us to take a more conservative approach to our growth and business strategy over the short term.”

The key components of this strategy are as follows:
􀂃 The Company is reducing the number of stores expected to open in fiscal year 2009 to approximately 15 and has cut all discretionary capital expenditure budgets not related to new stores by 50%. The Company is committed to actively managing its capital expenditures and does not intend to access the capital markets for additional funding in the
foreseeable future;
􀂃 the Company has already implemented certain cost containment measures for the remainder of this fiscal year and expects G&A expenses of approximately 3.2% of sales in fiscal year 2009; and
􀂃 the Company is suspending its quarterly cash dividend for the foreseeable future.