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Wild Oats Faces Net Loss During Q3

BOULDER, Colo. - Although Wild Oats Markets, Inc. net sales increased 5.8 percent to $250.7 million, compared to $237.0 million in the third quarter of 2003, the organic and natural foods retailer still faced a net loss for the quarter of $6.1 million – more than seven times the $861,000 net loss it incurred for the third quarter of 2003.

"Our results for the third quarter were unsatisfactory, but we believe we needed to take aggressive action to build our customer traffic and sales back in regions affected by intense competitive activity," said Perry D. Odak, president and c.e.o., during Wild Oats investor conference call yesterday. "The investments we are making in pricing and promotions have begun to drive sales improvement in the fourth quarter. We are encouraged by this momentum and will continue to invest in our business in the fourth quarter to ultimately drive profitable growth for Wild Oats Markets."

Net sales for the first nine months of 2004 were $766.2 million, a 7.1 percent increase compared to net sales of $715.3 million in the first nine months of 2003. In addition to the contribution from new stores, year-to-date net sales were bolstered by the positive benefit of the California United Food and Commercial Workers strike against conventional grocery retailers in Southern California, which concluded February 29, 2004. While the strike had a positive impact on sales in the first quarter, second and third quarter sales were adversely affected by conventional grocers' overly aggressive promotional activity in Southern California.

Comparable store sales declined 0.6 percent in the third quarter of 2004, compared with an increase of 0.8 percent in last year's third quarter. Wild Oats attributed this to the intense competition in certain geographic regions -- primarily Southern California and Texas -- caused negative comparable store sales throughout the third quarter in approximately one-third of the Company's store base. As a result, comparable store customer traffic in the third quarter of 2004 was negative 4.1 percent and comparable store average transaction size per customer was positive 3.5 percent.

Wild Oats ended the third quarter with 2.37 million square feet, which is an 8.8 percent increase from the third quarter of 2003. Weighted average square footage in the third quarter of 2004 was 2.32 million, an 8.4 percent increase compared with third quarter 2003 weighted average square footage of 2.14 million.

Wild Oats opened one Wild Oats Natural Marketplace in Cincinnati, Ohio and two Henry's Farmers Markets in Corona and Fullerton, Calif. in the third quarter of 2004. Additionally, the Company closed one store in Colorado Springs, Colo. as part of the completion of a relocation, and relocated one store in Vancouver, Wash. in September.
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