AUSTIN, Texas, Aug. 5 /EMWNews/ -- 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.



    "We have not undertaken any of these difficult decisions lightly," said

Mr. Mackey. "We are committed to improving our financial results and

believe these proactive steps are necessary to manage through the current

challenging environment, enabling us to emerge stronger and better

positioned to realize our growth potential and fulfill our long-term

mission and core values."



    During the quarter, the Company produced approximately $110 million in

cash flow from operations and received approximately $2 million in proceeds

from the exercise of stock options. Capital expenditures were approximately

$125 million of which approximately $110 million related to new stores and

approximately $8 million related to Wild Oats stores. In addition, the

Company paid approximately $28 million in cash dividends to shareholders.

At the end of the quarter, the Company had total debt of approximately $840

million, including $106 million drawn on its credit line. The Company

increased its credit line to $350 million during the third quarter and

currently has $123 million available on the facility.



    For the 40-week period ended July 6, 2008, sales increased 27.2% to

$6.2 billion. Comparable store sales increased 6.4%, and identical store

sales, excluding five relocated stores and three major expansions,

increased 4.9%. Net income was approximately $113.0 million, and diluted

earnings per share were $0.81. The Company estimates the negative impact on

net income from Wild Oats was approximately $25.3 million, or $0.18 per

diluted share. Earnings before interest, taxes, depreciation and

amortization ("EBITDA") were approximately $403 million year to date, and

earnings before interest, taxes, depreciation and other non-cash expenses

("EBITANCE") were approximately $446 million. Year to date, approximately

$233 million relating to share-based payments, depreciation and

amortization, LIFO and deferred rent was expensed for accounting purposes

but was non-cash.



    Year to date, the Company has produced approximately $267 million in

cash flow from operations and has received approximately $18 million in

proceeds from the exercise of stock options. Capital expenditures were

approximately $392 million of which $283 million related to new stores and

approximately $25 million related to Wild Oats stores. In addition, the

Company has paid approximately $81 million in cash dividends to

shareholders.



    Additionally, the Board of Directors has increased the Company's stock

repurchase authorization by $100 million, bringing the total current

authorization to $200 million.



    Results Excluding the Impact of Wild Oats



    The following information excludes the estimated quantifiable impact of

acquired operations.



    The following table shows the Company's growth in sales, comparable

store sales, and ending square footage year to date compared to its

historical five-year ranges and averages. The table also shows the

Company's year-to- date results for certain line items as a percentage of

sales compared to its historical five-year ranges and averages, and the

percentage of sales from identical as well as new and relocated stores year

to date compared to its historical five-year ranges and averages. The

Company believes this is relevant information as new and relocated stores

tend to have lower gross profit and higher direct store expenses as a

percentage of sales, resulting in a lower store contribution than identical

stores. Where applicable, historical percentages have been adjusted to

exclude Hurricane Katrina charges and credits, as well as share-based

payments expense incurred in fiscal year 2005 related to the Company's

September 2005 accelerated vesting of stock options.










                                            FY03-FY07 Range FY03-FY07  FY08

                                              Low    High    Average    YTD

    Sales growth                             13.2%   22.8%    18.8%   15.1%

    Comparable store sales growth             7.1%   14.9%    10.9%    6.4%

    Identical store sales growth              5.8%   14.5%    10.0%    4.9%

    Ending square footage growth               10%     18%      13%     15%



    Gross profit                             34.2%   35.1%    34.8%   34.7%

    Direct store expenses                    25.2%   26.0%    25.6%   26.3%

    Store contribution                        8.9%    9.6%     9.3%    8.4%

    G&A expenses                              3.1%    3.2%     3.2%    3.5%



    Percent of sales from identical stores     89%     91%      90%     88%

    Percent of sales from new & relocated

     stores                                     7%      9%       8%     10%





    For the third quarter, sales increased 10.5% to approximately $1.7

billion. Gross profit decreased 82 basis points from the prior year to

34.7% of sales. The LIFO charge was approximately $2.7 million versus $2.1

million in the prior year. Direct store expenses increased 29 basis points

to 26.4% of sales. Store contribution decreased 111 basis points to 8.4% of

sales from 9.5% of sales last year.



    For stores in the identical store base, gross profit decreased 48 basis

points to 35.2% of sales against a difficult year-ago comparison of 35.6%.

Direct store expenses improved 26 basis points to 25.8% of sales due

primarily to leverage in wages and share-based payments expense, which was

partially offset by an increase in health care costs as a percentage of

sales. Store contribution decreased 22 basis points to 9.4% of sales.



    G&A expenses increased 28 basis points to 3.5% of sales largely due to

the costs of integrating and supporting the Wild Oats stores, as well as

front- loaded G&A expenditures to support expected future growth.



    Excluding the estimated quantifiable impact of the Wild Oats

acquisition as discussed in the following section, adjusted net income was

approximately $38.8 million, and adjusted diluted earnings per share were

$0.28.



    Additional information on the quarter for comparable stores, identical

stores and all stores is provided in the following table.










                                       NOPAT     # of     Average     Total

    Comparable Stores         Comps   ROIC (1)  Stores     Size    Square Feet



    Over 11 years old

     (15.1 years old,

     s.f. weighted)            1.6%     84%       67      28,400    1,904,500

    Between eight and

     11 years old             -1.5%     57%       31      33,800    1,049,100

    Between five and

     eight years old           1.6%     42%       39      34,100    1,331,300

    Between two and

     five years old            4.6%     24%       40      45,500    1,821,200

    Less than two years

     old (includes two

     relocations)             10.8%      1%       18      59,500    1,071,600



    All comparable stores

     (7.7 years old, s.f.

     weighted)                 2.6%     36%      195      36,800    7,177,700

    All identical stores

     (7.7 years old, s.f.

     weighted)                 1.9%     37%      191      36,400    6,957,000

    All stores excluding

     Wild Oats (6.8 years

     old, s.f. weighted)                27%      214      38,200    8,176,300



    (1) Reflects only store-level capital and NOPAT, including pre-opening

        expense.





    Estimated Impact of Wild Oats on the Quarter and Fiscal Year



    Sales at the Wild Oats stores in operation during the third quarter

were $168.3 million, or 9.1% of total sales. The Company closed six Wild

Oats stores during the quarter, two of which were in connection with the

opening of new Whole Foods Market stores, and re-opened one Wild Oats store

that had been closed for a major renovation. Sales for the 57 continuing

stores were $164.2 million in the third quarter, and comparable store sales

growth was 5.4%.



    "We continue to be very pleased with the sales trends we are seeing at

the Wild Oats stores. In the third quarter, comparable store sales

increased 5.4%, and we have seen a 7.2% increase for the first four weeks

of the fourth quarter," said Mr. Mackey. "In the 38 stores we have

re-branded thus far, we have seen sales growth double from 6% before

re-branding to 12% after."



    As highlighted in the following table, the Company estimates the

negative impact on net income from Wild Oats in the quarter was

approximately $4.9 million, or $0.03 per diluted share. This estimate

excludes unquantifiable synergies and costs in the core business.








                                                                (In millions,

                                                                  except per

    Dilutive Impact of Wild Oats                                 share amount)

    Store contribution/(loss) from 57 continuing locations           $3.3  (1)

    Store contribution/(loss) from six locations closed during

     the quarter                                                     (0.8)

    G&A expenses - amortization of acquired intangibles and

     other misc. G&A expenses                                        (1.9) (2)

    Accretion of store closure reserve, and other store

     closure costs                                                   (1.0) (3)

    Interest expense related to term loan                            (7.8) (3)

    Total pre-tax impact                                            $(8.2)

    Total after-tax impact                                           (4.9)

    Impact per diluted share                                       $(0.03)



    (1) This reflects a store contribution of 2.0% of sales, a decline of

        25 basis points from the second quarter due to an increase in salaries

        and benefits as a percentage of sales which was partially offset by an

        improvement in gross margin.

    (2) This expense will be ongoing through the end of fiscal year 2008.

        Additionally, the Wild Oats home office in Boulder has become the home

        office for the Company's Rocky Mountain region.  Beginning in the

        third quarter, the Company began recording rent and other expenses

        associated with that office as global and regional G&A expenses rather

        than as expenses associated directly with the Wild Oats merger.

    (3) This will be an ongoing expense through fiscal year 2008 and beyond.





    On July 29, 2008, the United States Court of Appeals for the District

of Columbia, in a split decision, reversed the denial of the Federal Trade

Commission's (FTC) request for an injunction regarding the Company's

acquisition of Wild Oats and remanded the case to the U.S. District Court

for further evidentiary proceedings. Whole Foods Market is disappointed

with this decision, as customers and Team Members have already received

many benefits from this merger. The Company is evaluating its legal

options, which include seeking review by the entire Court of Appeals. While

the Company disagrees with the reversal of the lower court decision denying

the FTC's request for a preliminary injunction, the decision acknowledges

that neither the Court nor the FTC has found the merger to be unlawful.



    United Kingdom Operations



    The Company operates six stores in the U.K., five of which were

acquired and one store in Kensington which the Company opened last June.

Over the last four quarters, these six stores, including the regional

office G&A infrastructure, had pre-tax operating losses of approximately

$18.4 million, or $0.09 per diluted share. The Company is focused on

improving future results in the U.K. and expects to reduce its pre-tax

operating losses to $13 million in fiscal year 2009, $7 million in fiscal

year 2010, and to approach break even in fiscal year 2011.



    "We initially lost money when we entered into Canada as well; however,

our stores there continue to grow and improve each year and are now very

profitable, earning $14.6 million before taxes, or $0.07 per diluted share,

over the last four quarters," said Mr. Mackey. "We believe the long-term

growth potential in the U.K. is much greater than in Canada. We are

carefully evaluating all aspects of our operations in the U.K., with the

intent to improve our results over the short term and deliver strong

returns over the long term."



    Growth and Development



    In the third quarter, the Company opened four new stores in Hillsboro,

OR; Orlando, FL; St. Louis, MO; and Reno, NV and re-opened a remodeled Wild

Oats store in Medford, MA. The Company also closed six Wild Oats stores,

two in connection with the opening of new Whole Foods Market stores. The

Company ended the quarter with 271 stores totaling 9.6 million square feet.

Subsequent to the close of the quarter, the Company opened two new stores

in New York City, NY and Naperville, IL and closed one store in Rochester

Hills, MI which will relocate to another Rochester Hills location tomorrow.



    The Company recently signed two new store leases averaging 46,000

square feet in size in New York City, NY and Fairview, TX (a Dallas

suburb). The Company also terminated five leases in development totaling

approximately 244,000 square feet for stores scheduled to open in fiscal

year 2009 and beyond. In addition, since announcing in the third quarter of

2007 the Company's intent to decrease the size of several leases in

development, the Company has downsized eight leases by an average of 9,000

square feet each.



    The following table provides additional information about the Company's

store openings last fiscal year and thus far in fiscal year 2008, leases

currently tendered but not opened, and total development pipeline for

stores scheduled to open through fiscal year 2012. For accounting purposes,

a store is considered tendered on the date the Company takes possession of

the space for construction and other purposes, which is typically when the

shell of the store is complete or nearing completion. The average tender

period, or length of time between tender date and opening date, will vary

depending on several factors, one of which is the number of acquired

leases, ground leases and owned properties in development, all of which

generally have longer tender periods than standard operating leases.








                                   Stores       Stores    Current     Current

                                   Opened       Opened     Leases     Leases

    New Store Information           FY07       FY08 YTD   Tendered   Signed(1)



    Number of stores

     (including relocations)         21           14         20          80

    Number of relocations             5            0          5          18

    Number of lease

     acquisitions, ground

     leases and owned

     properties                       4            4          7          10

    New markets                       3            0          4          14

    Average store size

     (gross  square feet)        56,500       54,400     47,600      51,000

    As a percentage of

     existing store average

     size                          167%         153%       134%        143%

    Total square

     footage                  1,185,800      761,500    952,000   4,135,000

    As a percentage of

     existing square

     footage                        13%           8%        10%         43%

    Average tender period

     in months                      8.8         10.0

    Average pre-opening

     expense per store

     (incl. rent)            $2.6 mil(2)  $2.3 mil(3)

    Average pre-opening

     rent per store          $0.9 mil(2)  $0.9 mil(3)

    Average development

     cost (excl.

     pre-opening)           $15.1 mil(2)

    Average development

     cost per square foot        $278(2)



    (1) Includes leases tendered

    (2) Excludes Kensington in London, England

    (3) For stores opened in Q1-Q3 of fiscal 2008





    Growth Goals for Fiscal Year 2008



    The Company notes that fiscal year 2008 is a 52-week year comparing

against 53 weeks last year, with the extra week last year falling in the

fourth quarter, making it a thirteen-week quarter.



    For the first four weeks of the fourth quarter ended August 3, 2008,

comparable store sales increased 1.5%, and identical store sales grew 0.9%.

Comparable sales at the 57 continuing Wild Oats stores increased 7.2% over

the same period. If the Company's comparable store sales growth for the

fourth quarter is in line with or slightly below its quarter-to-date

results, this would result in comparable store sales growth for fiscal year

2008 of approximately 5%. Total sales growth, on a 52-week to 52-week

basis, would be approximately 12% for the fourth quarter and approximately

23% for the fiscal year. The Company notes that sales in the fourth quarter

last year included five weeks of the continuing Wild Oats stores, all

subsequently closed Wild Oats stores, and the divested Henry's and Sun

Harvest stores.



    The Wild Oats stores will only be included in the comparable store base

for the last four weeks of the fourth quarter and consequently are not

expected to have a material impact on the Company's overall comparable

store sales growth for the quarter.



    In addition to the two stores that have opened so far in the fourth

quarter, five to six additional stores are expected to open in the quarter,

two of which are relocations.



    The Company now expects a year-over-year decline in store contribution

as a percentage of sales in the fourth quarter similar in magnitude to the

174 basis point decline in the third quarter.



    The Company has already implemented certain cost containment measures

and expects G&A in the fourth quarter to be in line with the $61 million

reported in the third quarter.



    The Company expects non-cash share-based payments expense of

approximately $3 million to $4 million in the fourth quarter.



    The Company expects total pre-opening and relocation costs in the range

of $20 million to $22 million for the fourth quarter, bringing the full

year to $70 million to $72 million, at the low end of the Company's prior

guidance of $70 million to $80 million.



    The Company expects interest expense, net of investment and other

income, in the range of $8 million to $9 million in the fourth quarter,

resulting in a range of $31 million to $32 million for the full year, below

the Company's prior guidance of $35 million to $40 million due primarily to

lower average interest rates throughout the year.



    Based on these assumptions, the Company expects diluted earnings per

share in the range of $0.13 to $0.15 for the fourth quarter, bringing the

full year to $0.93 to $0.95 per share. The Company expects EBITDA of $98

million to $102 million for the fourth quarter, resulting in a range of

$501 million to $505 million for the fiscal year. The Company expects

EBITANCE of $113 million to $117 million in the fourth quarter, resulting

in a range of $559 million to $563 million for the fiscal year.



    The Company expects capital expenditures in the range of $160 million

to $165 million in the fourth quarter, resulting in a range of $552 million

to $557 million for the full fiscal year. This is below the Company's prior

fiscal-year guidance of $575 million to $625 million due primarily to

certain measures implemented in the third quarter to reduce discretionary

capital expenditures not related to new stores.



    Goals for Fiscal Year 2009



    While the uncertain economic outlook makes it difficult to predict

future sales results, the Company is providing the following preliminary

assumptions and expectations for fiscal year 2009. The Company expects to

update this guidance in its fourth quarter earnings announcement in early

November.



    Assuming no dramatic change in economic trends, the Company expects

total sales growth in fiscal year 2009 of 6% to 10%. The Company expects

comparable store sales growth of 1% to 5%, identical store sales growth of

0% to 4%, and approximately 15 new store openings, approximately six of

which are relocations.



    The Company has committed to significant cost reductions and expects

G&A expenses of approximately 3.2% of sales in fiscal year 2009.



    The Company expects total pre-opening and relocation costs in the range

of $50 million to $60 million versus the $70 million to $72 million

expected in fiscal year 2008. Approximately half of this amount relates to

pre-opening rent (primarily non-cash) for stores scheduled to open in

fiscal year 2010 and beyond.



    Assuming no significant change in interest rates, the Company expects

interest expense, net of investment and other income, in the range of $35

million to $40 million in fiscal year 2009 versus the $31 million to $32

million expected in fiscal year 2008.



    Based on these assumptions, the Company expects diluted earnings per

share in the range of $1.08 to $1.14 in fiscal year 2009, including

approximately $0.07 to $0.09 per share in dilution from Wild Oats and

approximately $0.06 per share in dilution from the Company's U.K.

operations. The Company expects EBITDA in the range of $560 million to $580

million and EBITANCE in the range of $625 million to $650 million in fiscal

year 2009.



    The Company is committed to managing its capital expenditures and does

not intend to access the capital markets for additional funding in the

foreseeable future. Capital expenditures in fiscal year 2009 are expected

to be in the range of $400 million to $450 million compared to the $552

million to $557 million in capital expenditures expected in fiscal year

2008.

    About Whole Foods Market



    Founded in 1980 in Austin, Texas, Whole Foods Market

(http://www.wholefoodsmarket.com) is the world's leading natural and

organic foods supermarket and America's first national certified organic

grocer. In fiscal year 2007, the Company had sales of $6.6 billion and

currently has 272 stores in the United States, Canada, and the United

Kingdom. Whole Foods Market employs more than 50,000 Team Members and has

been ranked for eleven consecutive years as one of the "100 Best Companies

to Work For" in America by FORTUNE magazine.



    Forward-looking statements



    The following constitutes a "Safe Harbor" statement under the Private

Securities Litigation Reform Act of 1995. Except for the historical

information contained herein, the matters discussed in this press release

are forward-looking statements that involve risks and uncertainties, which

could cause our actual results to differ materially from those described in

the forward-looking statements. These risks include but are not limited to

general business conditions, the successful integration of acquired

businesses into our operations, changes in overall economic conditions that

impact consumer spending, the impact of competition, changes in the

Company's access to available capital, the successful resolution of ongoing

FTC matters, and other risks detailed from time to time in the SEC reports

of Whole Foods Market, including Whole Foods Market's report on Form 10-K

for the fiscal year ended September 30, 2007. Whole Foods Market undertakes

no obligation to update forward-looking statements.



    The Company will host a conference call today to discuss this earnings

announcement at 4:00 p.m. CT. The dial-in number is 1-800-862-9098, and the

conference ID is "Whole Foods." A simultaneous audio webcast will be

available at http://www.wholefoodsmarket.com.










    Whole Foods Market, Inc.

    Consolidated Statements of Operations (unaudited)

    (In thousands, except per share amounts)



                                Twelve weeks ended        Forty weeks ended

                                July 6,      July 1,     July 6,      July 1,

                                 2008         2007        2008         2007

    Sales                    $1,841,242   $1,514,420  $6,164,993   $4,848,361

    Cost of goods sold and

     occupancy costs          1,208,495      976,130   4,054,290    3,154,840

      Gross profit              632,747      538,290   2,110,703    1,693,521

    Direct store expenses       490,188      394,713   1,631,466    1,256,805

      Store contribution        142,559      143,577     479,237      436,716

    General and

     administrative expenses     60,689       49,003     215,759      150,591

      Operating income before

       pre-opening and

       relocation                81,870       94,574     263,478      286,125

    Pre-opening expenses         15,773       13,719      41,019       40,717

    Relocation costs              2,008        1,276       8,770        6,196

      Operating income           64,089       79,579     213,689      239,212

    Interest expense             (8,094)         (24)    (28,113)         (31)

    Investment and other

     income                       1,495        2,223       5,430        8,837

      Income before income

       taxes                     57,490       81,778     191,006      248,018

    Provision for income

     taxes                       23,571       32,711      77,984       99,207

      Net income                $33,919      $49,067    $113,022     $148,811



    Basic earnings per share      $0.24        $0.35       $0.81        $1.06

    Weighted average shares

     outstanding                140,231      140,061     139,766      140,411



    Diluted earnings per

     share                        $0.24        $0.35       $0.81        $1.05

    Weighted average shares

     outstanding, diluted

     basis                      140,322      141,250     140,308      142,366



    Dividends declared per

     share                        $0.20        $0.18       $0.60        $0.69







    A reconciliation of the numerators and denominators of the basic and

diluted earnings per share calculations follows (in thousands, except per

share amounts):







                                       Twelve weeks ended   Forty weeks ended

                                        July 6,   July 1,   July 6,    July 1,

                                         2008      2007      2008       2007

    Net income (numerator for basic

     earnings per share)               $33,919   $49,067  $113,022   $148,811

    Interest on 5% zero coupon

     convertible subordinated

     debentures, net of income taxes        18        19        61         77

    Adjusted net income (numerator for

     diluted earnings per share)       $33,937   $49,086  $113,083   $148,888

    Weighted average common shares

     outstanding (denominator

     for basic earnings per share)     140,231   140,061   139,766    140,411

    Potential common shares

     outstanding:

      Assumed conversion of 5% zero

       coupon convertible

       subordinated debentures              91        97        92        122

      Assumed exercise of stock

       options                             -       1,092       450      1,833

    Weighted average common shares

     outstanding and potential

     additional common shares

     outstanding (denominator

     for diluted earnings per share)   140,322   141,250   140,308    142,366



      Basic earnings per share           $0.24     $0.35     $0.81      $1.06

      Diluted earnings per share         $0.24     $0.35     $0.81      $1.05







    Whole Foods Market, Inc.

    Consolidated Balance Sheets (unaudited)

    July 6, 2008 and September 30, 2007

    (In thousands)



    Assets

                                                    2008              2007

    Current assets:

    Cash and cash equivalents                      $24,917                $-

    Restricted cash                                  2,367             2,310

    Accounts receivable                            127,618           105,209

    Proceeds receivable for divestiture                  -           165,054

    Merchandise inventories                        316,086           288,112

    Prepaid expenses and other current assets       35,538            40,402

    Deferred income taxes                           73,231            66,899

      Total current assets                         579,757           667,986

    Property and equipment, net of accumulated

     depreciation and amortization               1,847,178         1,666,559

    Goodwill                                       684,027           668,850

    Intangible assets, net of accumulated

     amortization                                   81,987            97,683

    Deferred income taxes                          112,110           104,877

    Other assets                                    10,439             7,173

      Total assets                              $3,315,498        $3,213,128



    Liabilities And Shareholders' Equity

                                                     2008              2007

    Current liabilities:

    Current installments of long-term

     debt and capital lease obligations               $372           $24,781

    Accounts payable                               179,749           225,728

    Accrued payroll, bonus and other

     benefits due team members                     201,124           181,290

    Dividends payable                               28,057            25,060

    Other current liabilities                      305,189           315,491

      Total current liabilities                    714,491           772,350

    Long-term debt and capital lease

     obligations, less current installments        840,093           736,087

    Deferred lease liabilities                     189,664           152,552

    Other long-term liabilities                     66,424            93,335

      Total liabilities                          1,810,672         1,754,324

    Shareholders' equity:

    Common stock, no par value, 300,000

     shares authorized; 140,286 and 143,787

     shares issued; 140,285 and 139,240

     shares outstanding in 2008 and 2007,

     respectively                                1,062,546         1,232,845

    Common stock in treasury, at cost                    -          (199,961)

    Accumulated other comprehensive income           4,360            15,722

    Retained earnings                              437,920           410,198

      Total shareholders' equity                 1,504,826         1,458,804

    Commitments and contingencies

      Total liabilities and shareholders'

       equity                                   $3,315,498        $3,213,128







    Whole Foods Market, Inc.

    Consolidated Statements of Cash Flows (unaudited)

    July 6, 2008 and July 1, 2007

    (In thousands)



                                                       Forty weeks ended

                                                   July 6,            July 1,

                                                    2008               2007

    Cash flows from operating activities:

    Net income                                    $113,022           $148,811

    Adjustments to reconcile net income

     to net cash provided by operating activities:

        Depreciation and amortization              189,386            137,643

        Loss on disposition of assets                2,823              3,562

        Share-based payments expense                 7,599             10,687

        Deferred income tax benefit                 (6,693)           (13,553)

        Excess tax benefit related to

         exercise of team member stock options      (5,162)           (11,609)

        Deferred lease liabilities                  35,044              9,950

        Other                                        6,240              6,507

        Net change in current assets and

         liabilities:

          Accounts receivable                      (22,382)             3,066

          Merchandise inventories                  (36,006)           (42,278)

          Prepaid expense and other current assets   1,240              2,828

          Accounts payable                         (49,335)            16,128

          Accrued payroll, bonus and other

           benefits due team members                19,144             11,976

          Other current liabilities                 16,990             17,460

        Net change in other long-term

         liabilities                                (4,719)               807

    Net cash provided by operating activities      267,191            301,985

    Cash flows from investing activities:

      Development costs of new store locations    (282,529)          (272,923)

      Other property and equipment

       expenditures                               (109,671)          (109,937)

      Proceeds from hurricane insurance              1,500                -

      Acquisition of intangible assets              (1,502)           (22,351)

      Purchase of available-for-sale

       securities                                 (194,316)          (270,206)

      Sale of available-for-sale securities        194,316            440,818

      Decrease (increase) in restricted cash           (57)            57,785

      Payment for purchase of acquired

       entities, net of cash                       (20,130)            (3,841)

      Proceeds from divestiture, net               163,913                -

      Other investing activities                    (3,175)              (451)

    Net cash used in investing activities         (251,651)          (181,106)

    Cash flows from financing activities:

      Dividends paid                               (81,015)           (71,711)

      Issuance of common stock                      18,019             47,742

      Purchase of treasury stock                       -              (99,997)

      Excess tax benefit related to

       exercise of team member stock options         5,162             11,609

      Proceeds from long-term borrowings           174,000                -

      Payments on long-term debt and

       capital lease obligations                  (107,050)               (65)

      Other financing activities                       261

    Net cash provided by (used in)

     financing activities                            9,377           (112,422)

    Net change in cash and cash equivalents         24,917              8,457

    Cash and cash equivalents at

     beginning of period                               -                2,252

    Cash and cash equivalents at end of period     $24,917            $10,709



    Supplemental disclosure of cash flow

     information:

      Interest paid                                $33,230               $232

      Federal and state income taxes paid          $85,119           $107,926

    Non-cash transactions:

      Conversion of convertible

       debentures into common stock                   $154             $5,686







    Whole Foods Market, Inc.

    Non-GAAP Financial Measures (unaudited)

    (In thousands, except per share amounts)

    In addition to reporting financial results in accordance with generally

accepted accounting principles, or GAAP, the Company provides information

regarding Economic Value Added ("EVA"), Earnings before interest, taxes and

non-cash expenses ("EBITANCE"), Earnings before interest, taxes,

depreciation and amortization ("EBITDA") and consolidated results excluding

the impact of the Wild Oats acquisition on adjusted diluted earnings per

share in the press release as additional information about its operating

results. These measures are not in accordance with, or an alternative to,

GAAP. The Company's management believes that these presentations provide

useful information to management, analysts and investors regarding certain

additional financial and business trends relating to its results of

operations and financial condition. Management believes EBITANCE is a

useful non-GAAP measure of financial performance, helping investors more

meaningfully evaluate the Company's cash flow results by adjusting for

certain non-cash expenses. These expenses include depreciation,

amortization, non-cash share-based payments expense, deferred rent, and

LIFO. Similar to EBITDA, this measure goes further by including other

non-cash expenses, primarily those which have arisen since the use of

EBITDA became common practice and because of accounting changes due to

recent accounting pronouncements. Management uses EBITANCE as a supplement

to cash flows from operations to assess the cash generated from our

business available for capital expenditures and the servicing of other

requirements including working capital. In addition, management uses these

measures for reviewing the financial results of the Company and EVA for

incentive compensation and capital planning purposes.



    The following is a tabular reconciliation of the EVA non-GAAP financial

measure to GAAP net income, which the Company believes to be the most

directly comparable GAAP financial measure.










                                        Twelve weeks ended  Forty weeks ended

                                          July 6,  July 1,   July 6,   July 1,

    EVA                                    2008     2007      2008      2007

    Net income                           $33,919  $49,067  $113,022  $148,811

    Provision for income taxes            23,571   32,711    77,984    99,207

    Interest expense and other            12,233    6,760    42,071    20,542

      NOPBT                               69,723   88,538   233,077   268,560

    Income taxes (40%)                    27,889   35,415    93,231   107,424

      NOPAT                               41,834   53,123   139,846   161,136

    Capital charge                        54,099   37,564   175,800   122,931

      EVA                               $(12,265) $15,559  $(35,954)  $38,205





    The following is a tabular presentation of the non-GAAP financial

measures EBITDA and EBITANCE, including a reconciliation to GAAP net

income, which the Company believes to be the most directly comparable GAAP

financial measure.










                                        Twelve weeks ended  Forty weeks ended

                                          July 6,  July 1,   July 6,   July 1,

    EBITDA and EBITANCE                    2008     2007      2008      2007

    Net income                           $33,919  $49,067  $113,022  $148,811

    Provision for income taxes            23,571   32,711    77,984    99,207

    Interest expense, net                  6,599   (2,199)   22,683    (8,806)

      Income from operations              64,089   79,579   213,689   239,212

    Depreciation and amortization         57,789   42,509   189,386   137,643

      Earnings before interest, taxes,

       depreciation & amortization

       (EBITDA)                          121,878  122,088   403,075   376,855

    Non-cash expenses:

      Share-based payments expense         2,247    4,168     7,599    10,687

      LIFO expense                         2,700    2,100     8,032     4,300

      Deferred rent                        8,529    6,846    27,584     9,318

      Total non-cash expenses             13,476   13,114    43,215    24,305

    Earnings before interest, taxes, and

     non-cash expenses (EBITANCE)        135,354  135,202   446,290   401,160

    Weighted average shares outstanding,

     diluted basis                       140,322  141,250   140,308   142,366

      EBITANCE per share                   $0.96    $0.96     $3.18     $2.82







    Whole Foods Market, Inc.

    Non-GAAP Financial Measures (unaudited)

    (In thousands, except per share amounts)

    The following is a tabular presentation of the impact of Wild Oats

operations, included in GAAP net income, and a reconciliation of the

numerator of the adjusted diluted earnings per share non-GAAP financial

measure to GAAP net income, which the Company believes to be the most

directly comparable GAAP financial measure.










                                                 Twelve weeks      Forty weeks

                                                    ended             ended

                                                    July 6,           July 6,

    Dilutive Impact of Wild Oats                     2008              2008

    Adjustments to exclude impact of Wild Oats

       Store contribution/(loss) from

        continuing locations                        $3,311            $15,005

       Store contribution/(loss) from

        closed locations                              (812)            (4,530)

       Accretion of store closing reserve, and

        other store closure costs                   (1,016)            (4,236)

       General and administrative

        expenses, miscellaneous                       (504)           (14,748)

       Interest expense related to the

        term loan agreement, net                    (7,797)           (27,017)

       Amortization expense related to

        acquired intangibles                        (1,411)            (4,704)

       Write-off of Wild Oats private

        label product                                    -             (2,505)

       Total adjustments                            (8,229)           (42,735)

    Income taxes                                    (3,374)           (17,436)

       Total adjustments, net of tax                (4,855)           (25,299)

    Weighted average shares outstanding,

     diluted basis                                 140,322            140,308

       Impact per share                             $(0.03)            $(0.18)



    Net income                                     $33,919           $113,022

    Less:  Adjustments to exclude impact

     of Wild Oats, net of tax                       (4,855)           (25,299)

       Adjusted net income                          38,774            138,321

    Weighted average shares outstanding,

     diluted basis                                 140,322            140,308

       Earnings per share, adjusted                  $0.28              $0.99







     Contact: Cindy McCann

              VP of Investor Relations

              512.542.0204