TABLE OF CONTENTS

UNITED STATES



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 1, 2005

OR

(  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934



Commission file number 0-21577





WILD OATS MARKETS, INC.

(Exact name of registrant as specified in its charter)



Delaware
    84-1100630(State or other
    jurisdiction of
    (I.R.S. Employer
    Identification Number)Incorporation
    or organization)








3375 Mitchell Lane

Boulder, Colorado 80301

(Address of principal executive offices, including zip code)



(303) 440-5220

(Registrants telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act: None



Securities registered pursuant to Section 12(g) of the Act:





Title of Each Class



Common Stock, $.001 par value



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90
days:

Yes       ( X )       No       (
)



Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o



Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2):

Yes       ( X )       No       (
)



The aggregate market value of the voting and non-voting common stock of
the registrant held by non-affiliates of the registrant based on the closing price at
which such stock was sold as reported by NASDAQ National Market on June 25, 2004 was
approximately $156,871,356. For purposes of this calculation, executive officers,
directors and 5% or greater stockholders are deemed to be affiliates of the registrant.



As of February 26, 2005, the registrant had outstanding 28,560,698
shares of common stock, par value $.001 per share.



Pursuant to Rule 12b-25(e) under the Securities Exchange Act of 1934
this Form 10-K does not include disclosures for Part II, Items 6, 7, 7A, 8 and 9A. These
items and the complete certifications by the Chief Executive Officer and Chief Financial
Officer pursuant to Rule 13(a)-14(a) under the Securities Exchange Act of 1934, and the
certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, will be filed by
amendment.





DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the Registrants
Annual Meeting of Stockholders to be held on May 17, 2005, have been incorporated by
reference into Part III of this report.



---

TABLE OF CONTENTS

|PART I.   |  |                                                                                                                         | PAGE
|--------- |  | ----------------------------------------------------------------------------------------------------------------------- | ----
|          |  |                                                                                                                         |     
|Item 1.   |  | Business                                                                                                                | 3   
|          |  |                                                                                                                         |     
|Item 2.   |  | Properties                                                                                                              | 8   
|          |  |                                                                                                                         |     
|Item 3.   |  | Legal Proceedings                                                                                                       | 10  
|          |  |                                                                                                                         |     
|Item 4.   |  | Submission
      of Matters to a Vote of Security Holders                                                               | 10  
|          |  |                                                                                                                         |     
|PART II.  |  |                                                                                                                         |     
|          |  |                                                                                                                         |     
|Item 5.   |  | Market for
      Registrants Common Equity, Related Stockholder Matter and Issuer Purchases of Equity
      Securities | 11  
|          |  |                                                                                                                         |     
|Item 9.   |  | Changes in and
      Disagreements with Accountants on Accounting and Financial Disclosure                              | 11  
|          |  |                                                                                                                         |     
|Item 9B.  |  | Other Information                                                                                                       | 12  
|          |  |                                                                                                                         |     
|PART III. |  |                                                                                                                         |     
|          |  |                                                                                                                         |     
|Item 10.  |  | Directors
      and Executive Officers of the Registrant                                                                | 12  
|          |  |                                                                                                                         |     
|Item 11.  |  | Executive Compensation                                                                                                  | 12  
|          |  |                                                                                                                         |     
|Item 12.  |  | Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                    | 12  
|          |  |                                                                                                                         |     
|Item 13.  |  | Certain
      Relationships and Related Transactions                                                                    | 12  
|          |  |                                                                                                                         |     
|Item 14.  |  | Principal Accountant
      Fees and Services                                                                            | 12  
|          |  |                                                                                                                         |     
|PART IV.  |  |                                                                                                                         |     
|          |  |                                                                                                                         |     
|Item 15.  |  | Exhibits, Financial
      Statements and Financial Statements Schedules                                                 | 13  
|          |  |                                                                                                                         |     



PART I.



Item 1.

BUSINESS





Who We Are

Wild Oats Markets, Inc. ("Wild Oats", "we",
"us" and "our") is one of the largest natural foods supermarket chains
in North America. As of February 26, 2005, we operated 108 natural foods stores in 24
states and British Columbia, Canada under several names, including:



- Wild Oats Natural Marketplace (nationwide)
- Henrys Farmers Market (southern California and Phoenix, Arizona)
- Sun Harvest Farms (Texas)
- Capers Community Market (British Columbia, Canada)





We are dedicated to providing a broad selection of natural, organic and
gourmet foods, environmentally friendly household products and natural vitamins,
supplements, herbal and homeopathic remedies and body care products at competitive prices,
in an inviting and educational store environment that emphasizes customer service. Our
broad selection of natural and organic products appeals to health-conscious shoppers while
offering virtually every product category found in a conventional supermarket, including
dry grocery, produce, meat, poultry, seafood, dairy, frozen, prepared foods, bakery,
vitamins and supplements, health and body care, and household items. We believe that
industry data that states that the natural products industry currently comprises less than
5% of the total grocery industry suggests significant potential for us to continue to
expand our customer base.





A Recap of 2004



Wild Oats sales grew from $969.2 million in 2003 to $1.048
billion in fiscal 2004, an overall sales growth of 8.1%. Our improvements in sales
resulted in part from the addition of 12 new stores during fiscal 2004, for a total net
increase in stores (after closures and sales) of five new stores. We increased sales and
average transaction size nationwide in fiscal 2004. Strikes by grocery store workers in
conventional grocery stores in southern California commencing in October 2003 and
continuing through February 2004 resulted in increased sales and customer counts in our 17
Henrys Farmers Market and five Wild Oats Natural Marketplace stores in those regions
for the first two months of fiscal 2004. The increased sales resulted in negative
comparable store sales results during the fourth quarter of fiscal 2004 as we lapped the
increased strike-related performance in the same period in 2003. See "Selected
Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations  Year over Year 2004 v. 2003 Comparisons
of Certain Selected Income Statement Data." In 2004, we switched our primary
distributor to United Natural Foods, Inc. ("UNFI") and consolidated our smaller
produce warehouse facilities into a single 241,000 square foot distribution center
("DC") to service our stores located in the western United States.



Fiscal 2004 was a year in which many of the initiatives commenced in
2001 and 2002 were fully implemented. These initiatives included:



- refinement of our growth strategy,
- focus on brand awareness, and
- use of new information technology systems.





Growth Strategy. We continue to focus on growth through new store
development in areas where we already have a market presence. In 2004, we opened 12 new
stores, including two relocations and one format change, in the following cities:
metropolitan Phoenix, Arizona (two stores); Corona, Fullerton and Mission Viejo,
California; Colorado Springs and Superior, Colorado; metropolitan Indianapolis, Indiana;
Omaha, Nebraska; metropolitan Cincinnati, Ohio; metropolitan Salt Lake City, Utah; and
metropolitan Vancouver, Washington. We sold one store that did not fit our business model
in New York, New York; we relocated two stores in each of Colorado Springs, Colorado, and
Vancouver, Washington; and we closed four stores, one of which was re-opened in a new
format in Phoenix, Arizona. In 2004, we added 10% more floor space for a total of 2.45
million square feet. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations  Year over Year 2004 v. 2003 Comparisons of
Certain Selected Income Statement Data."





As a result, as of January 1, 2005, we had 108 stores located in 24
states and Canada, as compared to 103 stores in 24 states and Canada as of the end of
fiscal 2003. A summary of store openings, acquisitions, closures and sales is as follows:

| |                                        |  | TOTAL
    STORE COUNT
| | -------------------------------------- |  | ---------------------
| |                                        |  |                      
| |                                        |  |                      
| |                                        |  |                      
| |                                        |  |                      
| |                                        |  |                      
| |                                        |  |                      
| | Store count at beginning of
    period |  |                      
| | Stores opened                          |  |                      
| | Stores acquired                        |  |                      
| | Stores closed                          |  |                      
| | Stores sold                            |  |                      
| |                                        |  |                      
| | Store count at end of
    period       |  |                      
| |                                        |  |                      
| |                                        |  |                      

> *Includes the closure of one store in Phoenix, Arizona that was
>     converted to a new format and reopened in 2004.



Brand Awareness. In 2004, we expanded our brand awareness  to
include advertising focused on the quality of the food we sell. We introduced our Wild
Oats magazine, which is published and mailed to households surrounding our store and
which emphasizes food quality and provides nutritional information and recipes, as a brand
awareness initiative.  Our consumer education campaigns during the last year covering
a number of health issues also built the brand identity and positioned Wild Oats as a
trusted resource for health and wellness information. We provided information regarding
the safety of our meat and seafood in light of increased public concern related to
"Mad Cow" disease and contaminants in farm-raised fish. We launched educational
campaigns to highlight the availability in our stores of products for specific diet
regimes, such as gluten-free diets and a lower carbohydrate diet. We launched the
"Superfoods" program, which included signage, brochures and recipes, to help our
customers identify nutritionally dense foods in our stores, and incorporate these foods in
their diets. We also continued to build brand awareness in 2004 through the introduction
of 581 new and reformulated private label products.  Also in 2004, Wild Oats built
brand awareness by initiating an online retailing test of Wild Oats private label grocery
products in the Chicago area with Peapod, a leading U.S. Internet grocer. The test was
very successful and the parties are currently discussing an expansion to other markets
served by Peapod. We are discussing with other retailers the sale of our private label
products, and operation of branded Wild Oats "store-within-a-store" concepts
outside of our traditional retail channel to further build brand awareness.  Over the
past several years, we have actively sought to establish and obtain federal protection for
trademarks, including logos and label design architecture, used in conjunction with the
expansion of our private label products, as well as marketing materials used in our
stores. We believe that the redesign of our private label packaging, combined with our
applications for federal trademark protection, supports our efforts to build brand
awareness.





Information Technology Systems. We have invested over $25 million
in information technology since 2002 to provide our stores with common systems and better
tools to control labor and shrink, and so that we can more effectively manage store
receiving, ordering, and sales data. In 2004, we commenced testing of a store receiving
program, implemented a timekeeping and labor scheduling program and implemented a
warehouse management system for our DC.





Natural Products Industry





Retail sales of natural products have grown from $7.6 billion in 1994
to $18.3 billion in 2003, a compound growth rate of approximately 10.3%, and total sales
of natural products (including natural product retailers, mass market retailers,
multi-level marketers and through practitioners, internet and mail order) reached $42.8
billion in 2003, an 8.1% increase over the prior year; while sales growth in the
traditional grocery industry has remained relatively flat over the same period (Natural
Foods Merchandiser, June 2004). We believe that this growth reflects a broadening of
the natural products consumer base, which is being propelled by several factors, including
healthier eating patterns, increasing concern regarding food purity and safety, and
greater environmental awareness. While natural products generally have higher costs of
production and correspondingly higher retail prices, we believe that more of the
population now attributes added value to natural products and is willing to pay a premium
for such products. Despite the increase in natural foods sales within conventional
supermarkets, we believe that conventional supermarkets still lack the concentration on a
wide variety of natural and organic products and emphasis on service and consumer
education that our stores offer.







Operating Strategy



Our objective is to become the grocery store of choice both for natural
foods shoppers and quality-conscious consumers in each of our markets by emphasizing the
following key elements of our operating strategy:





Destination format. Our stores are one-stop, full-service
supermarkets for customers seeking quality natural, organic and gourmet foods and related
products. Our prototype stores range from 26,000 to 32,000 square feet, and offer a wide
range of stock-keeping units of natural foods products in virtually every product category
found in a conventional supermarket.





High product standards. We seek to offer a broad range of products
meeting our product standards throughout our merchandise categories, and emphasize unique
products and brands not typically found in conventional supermarkets. We believe our
product standards are among the highest in the industry. We routinely conduct quality
assurance checks of our manufacturers facilities to verify compliance with our
standards. Each of our stores tailors its product mix to meet the preference of its local
market, and where cost of goods and distribution logistics allow, source produce from
local organic growers. We also operate regional commissary kitchens and bakeries that
provide our stores with fresh bakery items and an unique assortment of prepared foods for
the quality- and health-conscious consumer.





Educational and entertaining store environment. Each store strives
to create a fun, friendly and educational environment that makes grocery shopping
enjoyable, encouraging shoppers to spend more time in the store and to purchase new
products. In order to enhance our customers understanding of natural foods and how
to prepare them, we train our store staff to educate customers about the benefits and
quality of our products and prominently feature educational brochures, newsletters, and
in-store demonstrations and product samplings, as well as an in-store consumer information
department. Computer kiosks offer access to our Web site and informational databases on
health issues.





Extensive community involvement. We seek to engender customer
loyalty by demonstrating our high degree of commitment to the local communities in which
we operate. Each store makes significant monetary and in-kind contributions to local
not-for-profit organizations through programs such as "5% Days," where a store
may donate 5% of its net sales from one day to a local not-for-profit group, and a
"Charity Work Benefit" where we pay employees for time spent volunteering for
local charities.





Multiple store formats. We operate in one operating segment, retail
grocery, with two store formats: natural foods supermarkets, which emphasize gourmet and
natural and organic products and high-quality service; and farmers market stores, which
emphasize fresh produce, natural living products and price value. While each format has
the same core demographic customer profile, differing demographic appeals of each of the
formats allows us to operate successfully in a diverse set of markets, enabling us to
reach a broader customer base, increase our market penetration and have greater
flexibility with real estate selection.





Competitive pricing. We seek to offer products at prices that are
competitive with those of other natural foods stores and conventional markets. Our
"Wild Buy" program offers a large weekly selection of unadvertised, in-store
specials, while our flyer continues to offer aggressive advertised specials on items that
we believe our customers want most. We believe these pricing programs broaden our consumer
appeal and encourage our customers to fulfill more of their shopping needs at our stores.





Products



Overview. We offer our customers a broad selection of unique
products that are natural and organic alternatives to those found in conventional
supermarkets, as well as gourmet and ethnic foods. We generally do not offer well-known
national conventional brands and focus instead on a comprehensive selection of natural
products within each category. Although the core merchandise assortment is similar at each
of our stores, individual stores adapt the product mix to reflect local and regional
preferences. We regularly introduce new natural, organic, gourmet and locally grown
products in our stores to differentiate our merchandise selection from products carried by
conventional supermarkets. We continue to evaluate our product selection based not just on
taste and price, but also in relation to our mission and values, which emphasize
accountability and giving back to our communities as two key values of our business.



We intend to continue to expand and enhance our prepared foods,
value-added items (such as marinated or stuffed meats and seafood) and in-store cafe
environment. We believe that consumers are increasingly seeking convenient, healthy,
"ready-to-eat" meals and that by increasing our commitment to this category we
can provide an added service to our customers, broaden our customer base and further
differentiate our stores from conventional supermarkets and traditional natural foods
stores.



Quality standards. We strive to offer products that taste great and
meet the following standards:



- Foods free of preservatives, artificial colors, synthetic additives and added hormones;
- Locally and organically grown produce, unique regional products; and
- Personal care and household items that are not tested on animals.





Private label. The natural foods industry is highly fragmented and
characterized by many small independent vendors. As a result, we believe that our
customers do not have strong loyalty to particular brands of natural foods products. In
contrast to conventional supermarkets whose private label products are intended to be
low-cost alternatives to name-brand products, we developed our "Wild Oats(R)" and "Henrys(R)" private label programs in order to
build brand loyalty to specific products based on our relationship with our customers and
our reputation as a natural foods authority. Through this program, we have successfully
introduced a number of high-quality, unique, natural and organic private label products,
such as cereals, breads, salad dressings, vitamins, chips, salsa, pretzels, cookies,
juices, Italian sodas, pasta, pasta sauces, oils, tuna, frozen products, such as pizza and
veggie burgers. In fiscal 2004, we introduced 581 new and reformulated private label
products, including a line of organic pastas and sauces, waffles, and frozen fruits and
vegetables, as well as imported cookies and chocolate truffles, and two new lines of
vitamins and supplements. We continue to expand our private label product offerings and
plan to introduce hundreds of additional private label products in 2005.





Company Culture and Store Operations



Company culture. Our culture is embodied in our mission statement:



"Wild Oats was founded on the vision of enhancing the lives of our
customers and

our people with products and education that support health and
well-being.



Wild Oats is committed to providing the highest quality, fresh and
natural food,

and health and wellness products in vibrant stores with people who are

friendly, eager and ready to educate.



At Wild Oats, we sell food that remembers its roots." (R)



Our values of service, integrity, quality, giving back to our
communities, increasing value for our stakeholders (which include our stockholders, our
employees and our communities) and accountability were adopted to support our mission
statement.





Management and employees. Our stores are organized into five
geographic regions, each of which has a regional director who is responsible for the store
operations within his or her region and who reports to our senior management. The regional
directors frequently visit their cluster of stores and are ultimately responsbile for
providing feedback on performance and ensuring adherence to our operating standards. We
maintain a staff of corporate level department specialists including natural living, food
service, produce and floral, meat/poultry/seafood and grocery merchandising directors who
manage centralized buying programs and formulate store-level merchandising,





Purchasing and Distribution



We have centralized merchandising departments for each major product
category. These departments identify and approve products and negotiate volume purchase
discount arrangements with distributors and vendors. The wholesale segment of the natural
foods industry provides a large and growing array of product choices across the full range
of grocery product categories. We entered into a new primary distribution agreement with
UNFI in January of 2004, after failing to achieve expected buying and distribution
synergies with Tree of Life, our former distributor. The distribution arrangement with
UNFI commenced effective April 1, 2004, and has a five-year term. The transition did not
result in any unusual or unexpected disruptions in product supply. Either party may
terminate the agreement for defaults by the other party of certain provisions of the
agreement. Under the terms of the UNFI agreement, we are obligated to purchase a majority
of certain specified categories of goods for sale in our U.S. stores from UNFI, except in
certain defined circumstances when such purchasing obligation is excused. We believe UNFI
has sufficient warehouse capacity and distribution technology to service our existing
stores distribution needs for natural foods and products as well as the needs of new
stores in the future. We have received and will continue to receive, as part of the
agreement, a transition fee payable over the term of the agreement and subject to the
Company meeting certain minimum purchase requirements, to offset a portion of the
transition costs incurred during the transition of our primary distribution relationship
to UNFI.

In February 2004, we brought on-line a 241,000 square foot DC in
Riverside, California to service our stores located in the western United States. We
believe this facility improves the quality and freshness of the perishable products we
sell in our stores by providing the appropriate ambient temperature from arrival at our
docks to loading on outgoing trucks. We also distribute certain grocery items from the DC
where cost effective. As we enter new markets, we will evaluate the need for additional
warehouse and distribution facilities. The DC currently delivers produce and/or groceries
to 70 stores and we anticipate adding approximately nine stores to its distribution base
in 2005.



We operate commissary kitchens in Phoenix, Arizona; Denver, Colorado;
Portland, Oregon and Vancouver, British Columbia, Canada. These facilities produce deli
food, take-out food, bakery products and certain private label items for sale in our
stores. Each kitchen can make deliveries to stores within a certain radius of the
facility. We evaluate the need for new commissary kitchens as we expand into new markets.
For stores outside the delivery area of our commisary kitchens, the stores food
service departments produce their own goods from standard recipes.







Marketing



We recognize the importance of building brand awareness within our
trade areas and advertise in traditional media outlets such as radio, newspapers,
television, outdoor and direct mail to gain new customer trial and repeat business. We
introduced television commercials for Wild Oats Natural Marketplace stores in 2004, as
well as new print and outdoor advertising for both Wild Oats and Henrys Farmers
Market formats. During 2004, we launched our Wild Oats magazine that highlights the
quality of food that we offer. We continued our shift in distribution strategy to target
consumers based on demographic information, distributing less often to a smaller, but more
targeted group. Our farmers market format stores primarily use flyers and "weekly
specials" advertising to generate consumer interest and drive customer traffic.







Management Information Systems



Our management information systems have been designed to provide
detailed store-level financial data, including sales, gross margin, payroll and store
contribution, to regional directors and store directors and to our management at
headquarters on a timely basis. We determined that our ability to control costs would be
increased by capital improvements in technology and software. In fiscal 2004, we
implemented several new systems, including:



- testing of a back-door  receiving program, a structured and integrated
      technology-based process for product ordering, vendor electronic data interchange
      ("EDI"), vendor replenishment and store back-door receiving and accounting;
- Kronos timekeeping and labor scheduling program; and
- a warehouse management system for our DC, which includes a suite of applications for
      electronic ordering and receiving of product, invoice matching and integration to our
      financial accounting system.



We anticipate that the back-door receiving program, in conjunction with
electronic ordering, which is part of the store replenishment program, will improve
verification of the accuracy of deliveries, increase the efficiency of our warehouse and
in-store receiving departments, and provide more control over inventory costs and store
stock.



The 2005 management information plans will have a continued focus on
improving store and home office efficiency, including the following initiatives:



- a systematic refresh of point of sale systems in older stores to reduce maintenance
      costs, improve cashier productivity, and customer service;
- relocation of the corporate data center to a third-party data center to avoid future
      building costs and ensure continous operations of the Companys critical information
      applications;
- implementation of a hand held ordering system, currently in test, to improve store level
      inventory management; and
- deployment of the EDI to improve operating efficiency at the store and home office
      level.







Competition



Our competitors currently include other independent and multi-unit
natural foods supermarkets, smaller traditional natural foods stores, conventional
supermarkets and specialty grocery stores. While certain conventional supermarkets,
smaller traditional natural foods stores and small specialty stores do not offer as
complete a range of products as we do, they compete with us in one or more product
categories. In recent years, several of the larger conventional grocers have added or
expanded specialty sections in their stores devoted specifically to natural and organic
foods and body care products, and have expanded their offerings of vitamins and
supplements. We believe that these specialty sections do not offer the customer service,
product selection and depth of product knowledge that we offer in our stores.



A number of other natural foods supermarkets offer a range of natural
foods products similar to those offered in our stores. We believe that the principal
competitive factors in the natural foods industry include customer service, quality and
variety of selection, store location and convenience, price and store atmosphere. We
directly compete with Whole Foods Markets, Inc. in Arizona, California, Colorado, Florida,
Illinois, Kentucky, Massachusetts, Missouri, Nevada, New Jersey, New Mexico, Oregon,
Texas, and Vancouver, British Columbia. We believe our natural foods supermarket concept
is differentiated from that of our primary competitor through our higher product standards
and more competitive pricing. Our physical stores are smaller in size, and less expensive
to build, which gives us access to markets that may not have the diversity believed
necessary to support large box stores. We do not believe we have any competitors for our
farmers market format stores in California, and we have only one small chain competitor in
the Phoenix metropolitan market.







Employees



As of February 26, 2005, we employed approximately 4,769 full-time
individuals and 3,988 part-time individuals. Approximately 8,326 of our employees are
engaged at the store-level and 431 are devoted to regional administrative and corporate
activities. We believe that we maintain a good relationship with our employees. However,
based on our past history of union organizing activity, we anticipate that in the future
one or more of our stores may be the subject of attempted organizational campaigns by
labor unions representing grocery industry workers.



All of our store managerial employees participate in an incentive
program that provides periodic payments based on achieving certain store-level performance
targets and operations standards. In addition, we also seek to attract and retain
enthusiastic and dedicated staff members through comprehensive benefits packages,
including discounts on purchases, health and disability insurance, an employee stock
purchase plan and an employer-matching 401(k) plan.







Available Information



Our corporate Internet Web site is http://www.wildoats.com,
("Internet Web site"), where we make available, free of charge, our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports, as soon as reasonably practicable after we electronically
file or furnish such materials to the Securities and Exchange Commission
("SEC"). These reports are also maintained by the SEC on their Web site at
http://www.sec.gov. Additionally, the public may read and copy any materials we file with
the SEC at the SECs Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Information on the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. The Charter of the Board of Directors Nominating Committee and our
Code of Ethics are also posted on our Internet Web site. We will post on our Internet Web
site any waivers, granted to the principal executive officer, principal financial officer,
principal accounting officer or controller or persons performing similar functions, that
relate to any element of the Code of Ethics enumerated in Item 406(b) of Regulation S-K.





Item 2.

PROPERTIES



We currently lease approximately 54,000 square feet for our corporate
headquarters in Boulder, Colorado. The lease has one and one-half years remaining on the
term, with one three-year renewal option.



We lease all of our stores, including operating, closed and under
construction locations. Our leases typically provide for a 10- to 15-year base term and
generally have several renewal periods. The rental payments are generally fixed base
rates, although many of our older leases call for payment of minimum base rent with
additional rent calculated on a percentage of sales over a certain break point. The
majority of leases signed in fiscal 2004 and beyond were, or will be, negotiated on a
turnkey basis, which substantially reduces our capital expenditures, with modest increases
in long-term rent.



Store Locations

The following map and store list show, as of February 26, 2005, the
number of natural foods grocery stores that we operate in each state and Canadian province
and the cities in which our stores are located.





































|Arizona:                  | Phoenix (3), Scottsdale, Tucson (2)                                                                                                                                                  
|------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Arkansas:                 | Little Rock                                                                                                                                                                          
|California:               | Chino Hills, Corona, Costa Mesa, Escondido,
    Fullerton, Hemet, Laguna Beach, Laguna Niguel, Long Beach, Mission Viejo, Pasadena, San
    Diego (11), Santa Monica (2), Yorba Linda
|Colorado:                 | Boulder (3), Colorado Springs, Denver (8),
    Fort Collins, Superior                                                                                                                
|Connecticut:              | West Hartford, Westport                                                                                                                                                              
|Florida:                  | Fort Lauderdale, Melbourne, Miami, Miami Beach                                                                                                                                       
|Illinois:                 | Evanston, Hinsdale                                                                                                                                                                   
|Indiana:                  | Indianapolis (2)                                                                                                                                                                     
|Kansas:                   | Kansas City (2)                                                                                                                                                                      
|Kentucky:                 | Lexington, Louisville                                                                                                                                                                
|Maine:                    | Portland                                                                                                                                                                             
|Massachusetts:            | Boston (3)                                                                                                                                                                           
|Missouri:                 | Kansas City, St. Louis                                                                                                                                                               
|Nebraska:                 | Omaha (2)                                                                                                                                                                            
|Nevada:                   | Las Vegas (2), Reno                                                                                                                                                                  
|New Jersey:               | Princeton                                                                                                                                                                            
|New Mexico:               | Albuquerque (3), Santa Fe                                                                                                                                                            
|Ohio:                     | Cincinnati (2), Cleveland, Columbus                                                                                                                                                  
|Oklahoma:                 | Tulsa                                                                                                                                                                                
|Oregon:                   | Bend, Portland (6)                                                                                                                                                                   
|Tennessee:                | Franklin, Memphis, Nashville                                                                                                                                                         
|Texas:                    | Austin (2), Corpus Christi, El Paso, McAllen,
    San Antonio (3)                                                                                                                    
|Utah:                     | Park City, Salt Lake City (4)                                                                                                                                                        
|Washington:               | Vancouver                                                                                                                                                                            
|British Columbia, Canada: | Vancouver (2), West Vancouver                                                                                                                                                        









Support Facilities:

We have two office facilities separate from stores, both in Colorado,
from which regional and home office support are provided. We have four commissary
kitchens: one free-standing kitchen in Portland, Oregon and three commissary facilities,
each located in either an operating store (Colorado and British Columbia, Canada) or a
closed store location (Arizona). We also have one DC in California.





Item 3.

LEGAL PROCEEDINGS





Wild Oats Markets Canada, Inc., as successor to Alfalfa's Canada, Inc.,
a Canadian subsidiary of the Company, is a defendant in Helen Fakhri and Ady Aylon, as
Representative Plaintiffs v. Alfalfa's Canada, Inc., a class action suit for monetary
damages brought in the Supreme Court of British Columbia, Canada by the representative
plaintiffs on behalf of two groups of claimants - those who claim to have contracted
Hepatitis A allegedly through the consumption of food purchased at a Capers Community
Market in the spring of 2002, and those who were inoculated against Hepatitis A in March
and April, 2002, after handling and/or consuming food products from Capers that were or
might have been contaminated with Hepatitis A. In the fourth quarter of 2003, the action
was certified as a class action by the court. We filed an appeal and a hearing was held in
September 2004. The appeal was denied in October 2004. In December 2004, the plaintiffs
brought a motion for a summary trial of certain issues, and such motion was denied in
January 2005. We intend to vigorously defend the suit. We are not able to estimate the
potential outcome of the suit at this time. Our insurers have acknowledged coverage for
defense costs and liability, and we have exhausted our deductible.



In April 2000, the Company was named as defendant in S/H 
Ahwatukee, LLC and YP - Ahwatukee LLC v. Wild Oats Markets, Inc., Superior Court of
Arizona, Maricopa County, by a landlord alleging Wild Oats breached a continuous
operations clause arising from the closure of a Phoenix, Arizona store. Plaintiff claimed
damages for diminution of value of the shopping center plus accelerated rent, fees and
attorneys fees and costs. After trial in November 2001, the judge awarded the
plaintiff an aggregate $536,000 in damages and attorneys fees. Our appeal of
judgment was denied in the first quarter of fiscal 2004, and we filed a motion for
reconsideration, which was denied. We filed a petition for review with the Arizona Supreme
Court, which was denied. As of the end of fiscal 2004, we have accrued $790,000, which we
believe to be adequate to fully satisfy the judgment, including interest and
attorneys fees.





Auchterlonie, individually and on behalf of all others similarly
situated and the general public, and Roes 1 to 1000 vs. Wild Oats Markets, Inc. and Does 1
through 100, is a purported class action suit brought in August 2004 in the Superior
Court, County of Los Angeles, for payment of overtime and damages relating to alleged
violations of the California Business and Professions Code by a former managerial
employee, on behalf of himself and all other similarly situated California employees,
claiming that store directors at our California stores should have been classified as
non-exempt employees and paid on an hourly basis. Plaintiff also alleges that our
incentive bonus program is illegal based upon deductions for items outside of the
employees control. We believe that the employee, a former store director, was
properly classified as an exempt employee based upon his job duties, and we intend to
vigorously defend the suit. At this time, we do not have sufficient facts to estimate any
potential damages. The case has been designated non-complex and trial has been scheduled
for October 2005.



The Company also is named as defendant in various actions and
proceedings arising in the normal course of business. In all of these cases, we are
denying the allegations and are vigorously defending against them and, in some cases, has
filed counterclaims. Although the eventual outcome of the various lawsuits cannot be
predicted, it is managements opinion that these lawsuits will not result in
liabilities that would materially affect our consolidated results of operations, financial
position, or cash flows.





Item 4.

SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.





PART II.





Item 5.

MARKET FOR
REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS

AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the NASDAQ National Market under the
symbol "OATS".



The following are the quarterly high and low sales prices for each
quarter of the past two years:



| |                     |  | HIGH   |  | LOW   | 
| | ------------------- |  | ------ |  | ----- | 
| |                     |  |        |  |       | 
| | First Quarter 2003  |  | $10.75 |  | $7.12 | 
| | Second Quarter 2003 |  | 11.97  |  | 9.19  | 
| | Third Quarter 2003  |  | 12.70  |  | 9.75  | 
| | Fourth Quarter 2003 |  | 12.29  |  | 10.00 | 
| |                     |  |        |  |       | 
| | First Quarter 2004  |  | 15.35  |  | 11.89 | 
| | Second Quarter 2004 |  | 15.37  |  | 11.83 | 
| | Third Quarter 2004  |  | 14.07  |  | 7.47  | 
| | Fourth Quarter 2004 |  | 8.87   |  | 5.67  | 







As of February 26, 2005, Wild Oats common stock was held by 567
stockholders of record. No cash dividends have been declared previously on our common
stock, and we do not anticipate declaring a cash dividend in the near future. Our Second
Amended and Restated Credit Agreement for our credit facility contains restrictions on the
payment of cash dividends without lender consent for so long as amounts remain unpaid
under the facility.







Cautionary Statement Regarding Forward-Looking Statements



This Report on Form 10-K contains "forward-looking
statements," within the meaning of the Private Securities Litigation Reform Act of
1995, which involve known and unknown risks. Such forward-looking statements include
statements as to the number of stores we plan to open or relocate in future periods and
the anticipated performance of such stores; the impact of competition; the sufficiency of
funds to satisfy our cash requirements through the remainder of fiscal 2005; the impact of
changes resulting from our merchandising and marketing programs; our ability to benefit
from past supply chain modifications; expected pre-opening expenses and capital
expenditures; and other statements containing words such as "believes,"
"anticipates," "estimates," "expects," "may,"
"intends" and words of similar import or statements of management's opinion.
These forward-looking statements and assumptions involve known and unknown risks,
uncertainties and other factors that may cause our actual results, market performance or
achievements to differ materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. Important factors that could
cause differences in results of operations include, but are not limited to, the timing and
execution of new store openings, relocations, remodels and closures; new competitive
impacts; changes in product supply or suppliers and supplier performance levels; changes
in management information needs; changes in customer needs and expectations; changes in
government regulations applicable to our business; changes in economic or business
conditions in general or affecting the natural foods industry in particular; and
competition for and the availability of sites for new stores. We undertake no obligation
to update any forward-looking statements in order to reflect events or circumstances that
may arise after the date of this Report.







Item 9.

CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE



Not applicable.



Item 9B.

OTHER INFORMATION



Not applicable.





PART III.





Item 10.

DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information included under the captions "Election of
Directors" and "Executive Compensation-Management-Executive Officers" in
our definitive Proxy Statement in connection with the Annual Meeting of stockholders to be
held May 17, 2005, to be filed with the Commission approximately April 1, 2005, is
incorporated herein by reference.







Item 11.

EXECUTIVE COMPENSATION





The information included under the caption "Executive
Compensation" in our definitive Proxy Statement in connection with the Annual Meeting
of stockholders to be held May 17, 2005, to be filed with the Commission approximately
April 1, 2005, is incorporated herein by reference.







Item 12.

SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The information included under the caption "Security Ownership of
Certain Beneficial Owners and Management" and "Equity Compensation Plan
Information" in our definitive Proxy Statement in connection with the Annual Meeting
of stockholders to be held May 17, 2005, to be filed with the Commission approximately
April 1, 2005, is incorporated herein by reference.







Item 13.

CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS



The information included under the caption "Directors and
Executive Officers - Certain Transactions" in our definitive Proxy Statement in
connection with the Annual Meeting of stockholders to be held May 17, 2005 to be filed
with the Commission approximately April 1, 2005, is incorporated herein by reference.







Item 14.

PRINCIPAL ACCOUNTANT
FEES AND SERVICES

The information included under the caption "Principal Accountant
Fees and Services" in our definitive Proxy Statement in connection with the Annual
Meeting of stockholders to be held May 17, 2005, to be filed with the Commission
approximately April 1, 2005, is incorporated herein by reference.





PART IV.



Item 15.

EXHIBITS AND FINANCIAL
STATEMENT

SCHEDULES

|(a) | Financial Statements and
    Financial Statement Schedules. The following are filed as a part of this Report on
    Form 10-K:
|--- | ------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                               
|    | (1)                                                                                                                           
|    |                                                                                                                               
|    |                                                                                                                               
|    |                                                                                                                               
|    |                                                                                                                               
|    |                                                                                                                               
|    |                                                                                                                               
|    | (2)                                                                                                                           
|    | (3)                                                                                                                           
|    |                                                                                                                               
|    | Exhibit Number                                                                                                                
|    |                                                                                                                               
|    | 3(i).1.(a)**                                                                                                                  
|    | 3(i).1.(b)**                                                                                                                  
|    | 3(i).1.(c)**                                                                                                                  
|    | 3(ii).1**                                                                                                                     
|    | 4.1**                                                                                                                         
|    | 4.2**                                                                                                                         
|    | 4.3**                                                                                                                         
|    | 4.4**                                                                                                                         
|    | 10.1**                                                                                                                        
|    | 10.2#**                                                                                                                       
|    | 10.3#**                                                                                                                       
|    | 10.4#**                                                                                                                       
|    | 10.5#**                                                                                                                       
|    | 10.6#**                                                                                                                       
|    | 10.7#**                                                                                                                       
|    | 10.8#**                                                                                                                       
|    | 10.9#**                                                                                                                       
|    | 10.10#**                                                                                                                      
|    | 10.11#**                                                                                                                      
|    | 10.12#**                                                                                                                      
|    | 10.13#**                                                                                                                      
|    | 10.14#**                                                                                                                      
|    | 10.15#**                                                                                                                      
|    | 10.16#**                                                                                                                      
|    | 10.17#**                                                                                                                      
|    | 10.18#**                                                                                                                      
|    | 10.19#**                                                                                                                      
|    | 10.20#**                                                                                                                      
|    | 10.21#**                                                                                                                      
|    | 10.22#**                                                                                                                      
|    | 10.23#**                                                                                                                      
|    | 10.24#**                                                                                                                      
|    | 10.25#**                                                                                                                      
|    | 10.26#**                                                                                                                      
|    | 10.27**                                                                                                                       
|    | 10.28**                                                                                                                       
|    | 10.29**                                                                                                                       
|    | 10.30#**                                                                                                                      
|    | 10.31#**                                                                                                                      
|    | 10.32**                                                                                                                       
|    | 10.33**                                                                                                                       
|    | 10.34**                                                                                                                       
|    | 10.35**                                                                                                                       
|    | 10.36**                                                                                                                       
|    | 10.37**                                                                                                                       
|    | 10.38**                                                                                                                       
|    | 10.39**                                                                                                                       
|    | 10.40**                                                                                                                       
|    | 10.41**                                                                                                                       
|    | 10.42**                                                                                                                       
|    | 10.43**                                                                                                                       
|    | 10.44**                                                                                                                       
|    | 21.1**                                                                                                                        
|    | 23.1****                                                                                                                      
|    | 23.2****                                                                                                                      
|    | 31.1+***                                                                                                                      
|    | 31.2+***                                                                                                                      
|    | 32.1****                                                                                                                      
|    | 32.2****                                                                                                                      
|    |                                                                                                                               



|#    | Management Compensation Plan.                                                                                                                                                             
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**   | Previously filed.                                                                                                                                                                         
|+    | Included herewith                                                                                                                                                                         
|***  | To be supplemented by Amendment.                                                                                                                                                          
|**** | To be filed by Amendment.                                                                                                                                                                 
|(1)  | Incorporated by reference
    from the Registrants Form 10-K
    for the year ended December 28, 1996 (File No. 0-21577).                                                                
|(2)  | Incorporated by reference
    from the Registrants Amendment
    No. 2 to the Registration Statement on Form S-3 filed with the Commission on November 10,
    1999 (File No. 333-88011).
|(3)  | Incorporated by reference
    from the Registrants Registration
    Statement on Form S-1 (File No. 333-11261) filed on August 30, 1996.                                                 
|(4)  | Incorporated by reference
    from the Registration
    Statement on Form S-8 (File No. 333-66347) filed on October 30, 1998.                                                             
|(5)  | Incorporated by reference
    from the Registrants Form
    10-K for the year ended December 29, 2001 (File No. 0-21577), filed on March 27, 2002.                                       
|(6)  | Incorporated by reference
    from the Registrants Form
    10-K for the year ended January 1, 2000 (File No. 0-21577).                                                                  
|(7)  | Incorporated by reference
    from the Registrants Form
    10-Q for the period ended March 31, 2001 (File No. 0-21577).                                                                 
|(8)  | Incorporated by reference
    from the Registrants Form
    10-Q for the period ended June 30, 2001(File No. 0-21577).                                                                   
|(9)  | Incorporated by reference
    from the Registrants Form
    10-Q for the period ended June 29, 2002 (File No. 0-21577).                                                                  
|(10) | Incorporated by reference
    from the Registrants Form 8-K
    filed on May 5, 1998 (File No. 0-21577).                                                                                 
|(11) | Incorporated by reference
    from the Registrants Form
    10-Q for the period ended June 28, 2003 (File No. 0-21577).                                                                  
|(12) | Incorporated by reference
    from the Registrants Form
    10-K for the year ended December 28, 2002 (File No. 0-21577).                                                                
|(13) | Incorporated by reference
    from the Registrants Form
    10-K for the year ended December 27, 2003 (File No. 0-21577).                                                                
|(14) | Incorporated by reference
    from the Registrants report
    dated May 25, 2004 on Form 8-K (File No. 0-21577).                                                                         
|(15) | Incorporated by reference
    from the Registrants Form
    10-Q for the period ended June 26, 2004 (File No. 0-21577).                                                                  
|(16) | Incorporated by reference
    from the Registrants Registration
    Statement on Form S-3 filed with the Commission on August 20, 2004 (File No.
    333-18406).                         
|(17) | Incorporated by reference
    from the Registrants Form
    10-Q for the period ended September 25, 2004 (File No. 0-21577).                                                             







SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



|                     | Wild Oats Markets, Inc.                                         
|-------------------- | ----------------------------------------------------------------
|                     | (Registrant)                                                    
|                     |                                                                 
|                     |                                                                 
|Date: March 17, 2005 | By: /s/ Edward F. Dunlap                                        
|                     | Edward F. Dunlap                                                
|                     | Chief Financial Officer and Senior Vice
    President Operations
|                     | (Principal Financial and Accounting Officer)                    







Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.





|SIGNATURE                | TITLE                                            | DATE          
|------------------------ | ------------------------------------------------ | --------------
|                         |                                                  |               
|/s/ Perry D. Odak        | Chief Executive Officer,                         | March 17, 2005
|                         | President and Director                           |               
|                         | (Principal Executive
    Officer)                |               
|                         |                                                  |               
|/s/ Edward F. Dunlap     | Chief Financial Officer                          | March 17, 2005
|                         | Senior Vice President
    Operations             |               
|                         | (Principal Financial and
    Accounting Officer) |               
|                         |                                                  |               
|/s/ Robert G. Miller     | Chairman                                         | March 17, 2005
|                         |                                                  |               
|/s/ Stacey Bell          | Director                                         | March 17, 2005
|                         |                                                  |               
|/s/ David M. Chamberlain | Director                                         | March 17, 2005
|                         |                                                  |               
|/s/ Brian K. Devine      | Director                                         | March 17, 2005
|                         |                                                  |               
|/s/ David Gallitano      | Director                                         | March 17, 2005
|                         |                                                  |               
|/s/ Mark A. Retzloff     | Director                                         | March 17, 2005
|                         |                                                  |               
|/s/ John A. Shields      | Director                                         | March 17, 2005
|                         |                                                  |