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Whole Foods Comps Up 9.3% in Q1

AUSTIN, Texas -- Whole Foods Market, Inc. reported a 31.4 percent jump in sales for its first quarter yesterday, but the chain estimated that the negative impact on net income from Wild Oats was approximately $11.9 million in the quarter. Comparable store sales increased an impressive 9.3 percent, on top of a 7.0 percent increase for the prior year quarter. Identical store sales, which exclude five relocated stores and three major expansions, increased 7.1 percent on top of a 6.2 percent increase in the prior year.

Sales for the 16-week first quarter ended Jan. 20 were approximately $2.5 billion, Whole Foods said.

Net income was approximately $39.1 million, compared to $53.8 million a year ago. Excluding the estimated impact of the Wild Oats acquisition, adjusted net income was $51.0 million, the company said.

John Mackey, chairman, c.e.o., and co-founder of Whole Foods, reaffirmed his company's guidance on comps for the year, and stressed in a statement that he expects Whole Foods to remain fairly recession-proof.

"We realize there are a lot of questions out there about how a slowing economy might impact our sales,? Mackey said. ?Historically, our sales have been highly resilient during economic downturns. We attribute our strong sales to many factors, including our loyal core customers and their dedication to a natural and organic lifestyle, our high percentage of perishable product sales, and our extensive selection of high-quality prepared foods that attracts customers trading down from restaurants.

"In addition, we sell a high percentage of relatively small-ticket items, and we are better positioned today than we ever have been from a value perspective,? said Mackey. ?Given our prior experience, strong year-to-date comps, easier year-over-year comparisons, and the increased number of new stores entering the comp base, we are confident in reaffirming our comp guidance of 7.5 percent to 9.5 percent for the fiscal year.?

The company closed 12 Wild Oats stores during the quarter, including one that will re-open in May after a major renovation. It ended the quarter with 62 stores. Sales for the 62 continuing stores were $227.9 million, and identical store sales growth was 8.6 percent.

"Wild Oats was a highly centralized company, and we have taken a cautious approach to 'unplugging' the stores from the home office in Boulder," said Mackey. "As with many of our past mergers, we are making upfront investments to raise the stores up to our high standards, and these costs are in advance of what we expect to be a significant long-term improvement in sales. We are pleased by the trends we are seeing and expect to see continuous improvement as we move further along in our integration process."

In the first quarter, the company opened six new stores in Chandler, Ariz.; Napa, Calif.; Pasadena, Calif.; Cranston, R.I.; Nashville, Tenn.; and Sugar Land, Texas.

It has recently signed six new store leases averaging 50,500 square feet in size in Dublin, Calif. (a replacement site); Folsom, Calif.; San Fernando Valley, Calif.; Lake Grove, N.Y.; Franklin, Tenn.; and Fort Worth, Texas.
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