Grocer giant Whole Foods (WFMI) reported its first quarter results Tuesday, easily beating out analyst estimates for the quarter.

As we noted in our earnings preview for Whole Foods, analysts had forecast that the company would be announcing that it earned 26 cents per share during the quarter. Actual results were much stronger, at a reported 32 cents per share.

During the same period last year the company had earnings of 20 cents per share.

Eating less is being rewarded in a strange new way. Thinner employees at Whole Foods (WFMI) will enjoy deeper discounts on food, leading to an even wider disparity relative to the ... ummmm ... "bigger-boned" employees. A new employee rewards program called "Health Starts Here" offers employees discounts based on body mass index. Hit the gym, go for a jog or simply enjoy the perks of a naturally buzzing metabolism, and you can save a fortune. Carry around a little extra heft, and you'll pay more to maintain it.

At present, every Whole Foods employee receives a 20% discount on purchases in the store. By sweating to the oldies, however, they can take that discount to 30%. But dieting like a model won't work: nicotine use is a disqualifier. So, if you're trying to smoke your way to svelte, find another way.

All three of the major indexes finished Tuesday in the red, but there were several big names that moved up to new 52-week highs in Tuesday's trading.

Walgreen Co. (NYSE: WAG): The drugstore giant had a really good day on Wall Street after posting better than expected earnings in the morning before the market opened. The company posted earnings of 44 cents per share versus analyst estimates of 39 cents. The stock set a new 52-week high of $38.44 and closed the day up 9.2% at $37.35.

Whole Foods Markets, Inc. (NASDAQ: WFMI), once the grocery darling of the investing market, took a serious wrong turn somewhere in the M&A market in 2007. Ever since the ill-fated acquisition of Wild Oats, WFMI has taken a dive, plunging from highs in the $60s (2006) and $50s (until late 2007) to as low as $8.68 this past December. So it was with great joy that investors heralded news of the company's fiscal third quarter results last night, exceeding analyst expectations, with earnings per share of $0.25, or $35.0 million, and sales up 2% over the year-ago quarter, to $1.9 billion. Same-store sales declined compared to the year-earlier quarter, but reversed their declining trend, down 2.5% from Q3 2008 but up from Q2 2009.

The markets closed down in negative territory, but today will feel like a win to many traders. Each day the news keeps getting a set up for a sell-off and nothing materializes. Bears are even getting frustrated because of no substantial pullbacks. The weaker employment data had little dent, but then the weaker services market kept the rally from emerging today.

Here are today's unofficial closing bell levels:

Dow 9,280.97 -39.22 (-0.42%)
S&P 500 1,002.68 -2.97 (-0.30%)
Nasdaq 1,993.05 -18.26 (-0.91%)

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Whole Foods Market, Inc. (NASDAQ: WFMI) reported its earnings at $0.19 non-GAAP EPS and $1.86 billion in revenues for the second quarter, and Thomson Reuters had consensus estimates of $0.18 EPS and $1.87 billion. The earnings included non-cash asset impairment charges of approximately $13 million, or $0.05 per share.

There are several things that are good about the quarter and there are a few issues. Same store sales were -4.1%, yet it showed operating cash flow of $173 million and generated $98 million of free cash flow. The company also maintained certain aspects of guidance, at least sort of. It sees opening two additional stores (including one relocation) in the third quarter and sees opening three stores in the fourth quarter, and is still waiting on the divestment approval from the FTC.

Today's markets were under pressure most of the day after weekly jobless claims remained higher than estimates and after wholesale inflation rose more than expected. Earnings disappointments also added some pressure, yet oil rose sharply today with futures up over 10% at $38.60 late in the day after oil inventory levels were reported. Here are today's unofficial closing bell levels:

Dow 7,465.79 -89.84 (-1.19%)
S&P 500 778.93 -9.49 (-1.20%)
Nasdaq 1,442.82 -25.15 (-1.71%)

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The FTC won't give up its battle with Whole Foods (NYSE: WFMI) over the company's long-complete merger with Wild Oats Markets, but an agreement has been reached between Whole Foods and a small, local organic and natural foods' grocery, New Seasons Market. About six weeks ago in the New Seasons blog, popular CEO Brian Rohter highlighted an invasive subpoena received from Whole Foods' attorneys, claiming that his company's secrets are party to the FTC/Whole Foods dispute. The subpoena demanded a wide variety of documents, including all documents relating to competition with Whole Foods or Wild Oats; financial information, by store; market studies and strategic plans; and all plans for future stores, expansion and renovation. Local shoppers and business owners cried foul; the subpoena, many believed, was Whole Foods playing dirty pool.

Today, thanks to pressure from both the local and national community, Whole Foods came to an agreement with New Seasons whose terms weren't released, but in which the small Pacific Northwest chain will be required to release far less sensitive information. Rohter wrote that he was "pleased" with the outcome.

It could be that Whole Foods has far bigger fish to fry than whatever advantage it could have gained from New Seasons. The FTC recently asked a judge to order Whole Foods to bring back the Wild Oats signs, and to voluntarily halt whatever integration it still hasn't completed. What's more, rumors that the company is a takeover target could be distracting management as they (depending on these reports' truth) spin the rumor mill or wheel and deal with the potential acquirers. On the days' news, the stock was down 21 cents to $12.16, about four dollars higher than its five-year low, recorded just before Thanksgiving in November 2008.

With the FTC, argues Whole Foods Markets (NYSE: WFMI), it's personal. Ever since the federal agency began its review over the company's merger with Wild Oats Markets about a year and a half ago, Whole Foods says, the deck has been stacked against the organic and natural foods store chain. What's more, the FTC has continued to pursue Whole Foods to undo its deal even though the merger closed in August 2007, after the FTC lost its first challenge to the merger in federal court. Just last week, reports of an intrusive subpoena had many watchers crying foul over Whole Foods' behavior; this week, the FTC is getting its own harsh spotlight.

Whole Foods is appealing to Congress, and yesterday filed a lawsuit to stop the FTC from continuing its challenge to the long-completed merger. The FTC is running a rigged game, says CEO John Mackey, and what's more -- "we would be better off today if we hadn't done this deal" with Wild Oats. With the depressed economy (and, grocery analysts like myself would argue, Whole Foods' inability to develop a cohesive mission that resonated with sustainability-conscious shoppers), Whole Foods sales have been bottoming out, and the debt the company accrued to complete the merger is now weighing heavy on the balance sheet.

Indeed, this battle over a minority of the grocery market -- a minority the FTC inexplicably argues is called "premium and natural grocery" and is unfairly dominated by Whole Foods -- has gone on long enough.

In the continuing FTC battle with Whole Foods (NYSE: WFMI) over the company's merger with Wild Oats Markets (a merger, I might add, that's already complete; all of the stores in my region have been converted to Whole Foods markets for many months), there is a local casualty. This local casualty has not been forced out of business by the strength of the Whole Foods conglomerate, with, now, stores in every quadrant of the city -- no, it's thriving, popular with both customers and the quirky-and-excellent local purveyors of vegetables, cheeses, chickens. But New Seasons Market is facing unwelcome bullying from the organics food giant.

Yesterday in the New Seasons blog, popular CEO Brian Rohter points to the objectionable subpoena he's received from Whole Foods' attorneys, claiming that his company's secrets are party to the FTC/Whole Foods dispute. (A response from Whole Foods indicates that this request went out to 96 companies, stores and vendors, although those aren't detailed.) The subpoena demands a wide variety of documents, including all documents relating to competition with Whole Foods or Wild Oats; financial information, by store; market studies and strategic plans; and all plans for future stores, expansion and renovation. Rohter's attorneys have objected but tell him he could very well lose and be ordered to hand over the documents (at considerable cost to a small local grocery chain).

Rohter argues that, though Whole Foods insists only the attorneys and consultants will see the information "That's like trusting the fox to guard the henhouse – and we don't have any faith it's going to work like that. ... some of the people at Whole Foods have a history of less than stellar behavior when it comes to competing fairly." In a follow-up to a Whole Foods response at Portland Food and Drink, Rohter says, "And those "consultants"...? Once they've looked through our information they're not going to "unlearn" it. The very nature of their job means they carry things they've learned from one job to another. Will they ever work for Whole Foods again?"

Yuppie organic food market, Whole Foods (NYSE: WFMI) has been struggling with the slow economy. After all, the company that has jokingly been referred to as Whole Paycheck for its high prices has lost business as people have cut back on spending. Now, a private equity firm has stepped in to do a rare Private Investment in Public Equity (PIPE) deal -- buying 17% of its shares which boosted Whole Foods stock 19.8% after-hours.

Who would do such a thing? An affiliate of Leonard Green Partners, Green Equity Investors V, spent $425 million for its Whole Foods PIPE. Why did Leonard Green do this? Does it expect to take an active role in managing the company and somehow pull it out of its growth slump? Or is its 17% stake simply a passive investment -- and a bet that Whole Foods has bottomed out?

I think Leonard Green may have gotten a bargain. Whole Foods stock fell 6.2% during regular trading after it lowered its 2009 EPS estimates from $1.04 to between $0.95 and $1 -- it earned 82 cents a share in 2008. And based on that lower growth rate, Whole Foods trades at a PEG ratio of 0.6 -- on a P/E of 9.8 with earnings forecast to grow 16% in 2009.

There is no hard evidence that organic food is any better for people than beer and burgers. There are some studies that show all the good side effects of eating well, but they were probably paid for by companies that produce milk straight from cows or wild salmon.

It does not matter much if the entire organic thing is a hoax, when people don't have money to buy fancy food, they are going to have to settle for Spam and Cheese Wiz, whether they like it or not.

One company that will be hurt by the eating retrenchment is Whole Foods (NASDAQ: WFMI), a favorite of the upper middle class who wants to look down their noses at people who go to regular grocery stores. According to The Wall Street Journal, "Analysts say the upscale grocer probably will have to trim its earnings forecast for the current fiscal year and announce further cuts to capital spending or new-store plans."

The real question is how long it will take WFMI to recover from any downturn. Its customers may decide that they like cheap, fatty food and never return. Whole Foods has watched its shares go from a 52-week high of $51 to $10. Those stock certificates may become so worthless that people will have to eat them as part of a healthy meal. At least they will cost less than the Whole Foods produce.

Douglas A. McIntyre is an editor at 247wallst.com.

This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Whole Paycheck below in the comments.

Having long shopped at overpriced gourmet foods markets, I'll admit to having rolled my eyes a bit -- maybe even scoffed -- when I first heard the beloved nickname for Whole Foods (NASDAQ: WFMI), "Whole Paycheck." Of course, this was also when I was single and living on a dot-com boom-style income.

Today, I rarely shop at Whole Foods; there isn't one in my neighborhood, and it's true: it's not difficult to spend upwards of $100 on ingredients for one meal. While there are choices on the lower end of the price spectrum, especially in the company's 365 house brand line and seasonal produce, the grocery chain has long prided itself on providing a wide range of organic and gourmet ingredients; and if its customers demand star fruit from Brazil, stinky cheeses from around the globe, and sushi-quality tuna, by all means, Whole Foods will provide it, and won't bat an eye about charging for its hard work.

If a new legal ruling forces Whole Foods to reverse its Wild Oats buy-out, WFMI shares could soar.

A federal appeals court has decided that the FTC's challenge of the merger between Whole Foods (NASDAQ: WFMI) and Wild Oats should have gone forward. A lower court has said the FTC had to cease its investigation into whether the marriage was anti-competitive.

According to The Wall Street Journal, "Jeffrey Schmidt, head of the FTC's competition bureau, said the agency is hopeful the ruling will ultimately allow the FTC to undertake a full review of competitive issues raised by the combined companies."

Whole Foods ended up with 74 Wild Oats stores, which it plans to cut down to 50. The FTC could ask the new company to close other locations in areas where the new parent has two stores, and, perhaps a monopoly for that region.

The FTC could also argue that the entire merger constitutes an antitrust threat. That news could not be better for WFMI shareholders. If Wild Oat has to be spun back out, it would need to re-brand its stores, add expensive management, and undertake its own marketing. In other words, it would be a severely weakened competitor for Whole Foods, instead of a thorn in the side of WFMI shareholders.

Shares in WFMI are off well over 40% this year. Stocks in many other major food retailers are closer to flat. Part of this may be due to the concern that premium products do poorly in a recession. But it may also have to do with the fact that Wild Oats stores were considered weaker as a group than the original Whole Foods chain.

If WFMI gets to rid itself of the company it got in the buy-out, its shares might get back from $22, near their 52-week low, to the $30 to $40 range.

Douglas A. McIntyre is an editor at 247walls.com.

Whole Foods Market (NASDAQ: WFMI) CEO John Mackey nearly derailed his company's acquisition of Wild Oats with a series of blog entries and bizarre anonymous message board posting doing everything from trashing competitors to complimenting his own hairstyle.

The SEC opened an investigation that was recently closed without any action and now Mackey is back to blogging on the Whole Foods site. In a rambling post, Mackey explained the reasoning behind his postings and thanked his board of directors and the SEC for their support. He strongly denied that his postings critical of Wild Oats were designed to beat down that company's stock price, and also said that he had not intended to inflate this price of Whole Foods Market stock with his enthusiastic posts on that message board.

He added that "I wish to apologize to all the stakeholders of Whole Foods Market-customers, Team Members, investors, suppliers, and our communities."

Great. Now if he could just lower the prices so us poor folks could afford a 12 ounce bottle of organic carrot juice.