Harry's Market Experiences 2Q02 Net Loss, Forges Ahead with Whole Foods Agreement

Harry's Market Experiences 2Q02 Net Loss, Forges Ahead with Whole Foods Agreement

ATLANTA--While its $35 million acquisition by Whole Foods is still going as planned, Harry's Farmers Market Inc. experienced slightly decreased sales in its second quarter (2Q02) and a net loss due to increased competition in its Atlanta area. The company posted $33.3 million in sales for 2Q02, ended Aug. 1, compared to $35.3 million for the same quarter last year, coming in 5.7-percent lower due to increased competition from two stores that opened near Harry's in a Hurry locations in Atlanta, as well as from the general economic downturn experienced by the entire grocery industry. Gross margin decreased to $9.9 million, or 29.6 percent of net sales, compared to $10 million, or 28.4 percent of net sales, experienced in 2Q01. Operating expenses fell slightly to $10.1 million, compared to $10.4 million in 2Q01. Net loss was slightly better for 2Q02 at $.9 million (or $.15 per share lost), an improvement from last year's $1.1 million loss (or $.18 per share lost).

The company announced Oct. 23 that its shareholders approved the sale of its three megastores and support facilities to Whole Foods Market Group Inc. (NASDAQ:WFMI) for around $35 million in cash. Approximately $23 million of the proceeds will be used to pay off and retire Harry's credit facility. However, the five Harry's in a Hurry food stores were not included in the transaction with Whole Foods; Harry's will continue to operate and grow these stores, minus the recently closed Peachtree Road store in Atlanta. The acquisition was expected to be completed on or around Oct. 31.