Whole Foods Market Sales Up, Forecast Rosy

After some strategic adjustments involving pricing, value and size, Whole Foods Markets reports that its first-quarter sales are up nicely, climbing 7%. Net income jumped 79% to $49.7 million -- better than expected -- and the company upped its forecast for the months ahead.

Comparable-store sales climbed 3.5% -- the first positive quarter since the recession started. And the Austin, Texas-based company -- which has reacted to slowed consumer spending by moderating some of famously high prices, emphasizing value in its merchandising, and focusing on smaller stores -- says those gains are continuing, with comparable-store sales up 7% so far in its second quarter.

"Our first-quarter results exceeded our own expectations on both the top and bottom line," CEO John Mackey says in a release. "Given the momentum we are seeing, there are many reasons to be bullish about our future results." And while he says the company still believes there is considerable uncertainty regarding the economy, the consumer, and its competition, it raised its outlook for the year ahead. "As the world moves out of this recession, we believe we are well positioned to produce strong returns for our shareholders."

The retailer says it now expects sales growth of 8.5% to 10.5% for the remainder of the year, with comparable-store sales gaining between 3.5% and 5.5%.

Trends aren't so positive for other grocers. While Winn-Dixie also announced results that beat expectations, its second-quarter results slipped 3.3% to $2.2 billion, primarily due to store closings and storm-related sales. Identical-store sales fell 2.9%. Net income at the Jacksonville, Fla.-based chain dropped to $2.1 million from $16.1 million, primarily due to a non-recurring gain in the prior period.

"The challenging economic environment and deflationary pressures continue to impact sales for the entire supermarket industry," CEO Peter Lynch says in a statement. "Despite negative identical store sales, we are pleased with our overall operating execution during the quarter."

"It is clear that consumers remain very cautious with their spending," he says, "which has influenced our sales across the chain, primarily with respect to overall basket size."

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