Whole Foods earnings: Beating estimates organically

Today was a big day for Whole Foods Markets Inc. (NASDAQ: WFMI) as it had its court date regarding the merger with Wild Oats Markets Inc. (NASDAQ: OATS) and reported quarterly earnings after the close. As of 5:47 p.m., WFMI stock is up 10.1% in after-hours trading.

Chronologically then:

The question before the court today was whether these two companies constitute a unique market, as clearly they both compete with several other companies that sell organic foods, some as large as the world's biggest retailer, Wal-Mart Stores Inc. (NYSE: WMT). However, if Wild Oats acts as a constraint on Whole Foods, then a combined company would have greater pricing power. Key to the FTC case (which filed the suit against the $565 million merger) is an e-mail sent by Whole Foods CEO in which he says the deal would enable the company to "avoid nasty price wars." Mackey was also found leaving messages on Yahoo! message boards.

After the close this afternoon, Whole Foods also reported third-quarter earnings. While profit slipped 8.9% in the most recent to 35 cents per share, it beat analysts estimates of 33 cents per share. Sales were 13% higher during the quarter reaching $1.51 billion, a little short of the $1.54 billion estimated by analysts. The organic grocer was hit by costs on new stores. Whole Foods spent $15 million on preopening and relocation costs.

Key metric same-store sales rose 7% -- impressive, but less than the 9.9% jump a year ago. CEO John Mackey noted that comparable sales so far in the fourth-quarter have stabilized, as indicated from July 7.6% same-store sales growth. Next year, Mackey said he expects to open even more stores. As for the merger, he was hopeful it would be approved.

By 6:12 p.m., WFMI shares are up 8.3% in after-hours trading to $40.10.