Whole Foods dives after cutting outlook again

Whole Foods Market's (WFM) shares were sinking Wednesday after the natural-foods grocer missed analysts second-quarter estimates and, even worse, decreased its forecast for the fiscal year yet again.

In recent premarket trading, the Texas-based company's stock was dropping 17.8% to $39.40, setting it up for what likely will be one of its worst days ever in 22 years of trading. It had lost 0.7% to $47.95 by Tuesday's close, and for now, it has a 52-week range of $45.43 to $65.59.

The selling was prompted by Whole Foods saying it earned 38 cents a share in the latest quarter, on sales of $3.32 billion. According to FactSet, Wall Street was expecting 41 cents and revenue of $3.34 billion. Same-store sales were up 4.5%, though Whole Foods indicated comparables would have risen 5% if not for Easter's date. Still, analysts were looking for 5.1% growth.

For the full year, the company now expects sales to increase 10.5% to 11% — its third revision lower in a matter of months. Previously, Whole Foods had estimated 11% to 12% growth, before that 11% to 13%, and prior to that 12% to 14%. Same-store sales projections also declined again.

Earnings will probably be $1.52 to $1.56 a share, whereas Whole Foods last had been predicting $1.58 to $1.65. Before it started tapering its views, Whole Foods at one point pegged earnings at $1.69 to $1.72.

The numbers lead to yet more worries about the competition's negative effects on Whole Foods; this includes not just from Sprouts (SFM), also set to report this week, but big grocers such as Kroger (KR). And of course, there's Wal-Mart (WMT), which recently announced it would sell Wild Oats organic goods at lower prices. While it would be a surprise to see Whole Foods' core customers opting for Wal-Mart outright, the larger concern is that Whole Foods won't have as much ability to keep its prices elevated.

In its public history that goes back to 1992, the largest single-session drop ever for Whole Foods was in November 2006, when it lost 23%.