Thursday, November 6, 2008

Firm Buys $425 Million Stake in Whole Foods

"A Los Angeles-based private equity firm has bought a $425 million stake in Whole Foods Market Inc., giving the organic food grocer a cash infusion as it struggles to grow its sales during a tumultuous economic time.

Leonard Green & Partners will receive preferred stock that — if converted to common shares today — would give the firm a 17 percent stake in Whole Foods. The move was cheered by Wall Street, and Whole Foods shares shot up 19 percent in after-hours trading.

The news comes as Whole Foods reported one of its worst quarters ever, as same-store sales growth slowed in the company's fiscal fourth quarter to 0.4 percent and profit dropped 96 percent from the same time last year to $1.5 million. Only 2 and a half years ago, Whole Foods regularly posted double-digit sales increases and was the darling of Wall Street. But in the past year, its stock has sunk about 75 percent."

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