Whole Foods Comps Continue Decline in Q4

Although it saw a rise in revenue that met analysts’ expectations, Whole Foods Market reported a drop in comparable-store sales during the fourth quarter of fiscal 2016, a fifth consecutive quarter of declines.

The Austin, Texas-based natural food retailer, which additionally announced a change from a co-CEO structure to that with a single chief, saw total sales rise to $3.5 billion, which was expected by Wall Street, compared with $3.4 billion a year ago. However, same-store sales dropped 2.6 percent, compared with a 2 percent drop predicted by some analysts.

Net income rose 57 percent to $88 million, or 28 cents per share, during the 12-week quarter, which ended Sept. 25. This was higher than analysts’ expected 24 cents per share for the quarter.

During the quarter, Whole Foods produced $352 million in cash flow from operations, invested $195 million in capital expenditures, returned $44 million in quarterly dividends to shareholders, and repurchased $15 million, or 0.5 million shares of common stock.  It ended the quarter with $1.1 billion of total debt and $1.2 billion of total available capital.

“In a year that presented many headwinds for food retailers, we made measurable progress on positioning our company for continued success while producing industry-leading sales per gross square foot and healthy returns on invested capital,” said John Mackey, co-founder and co-CEO of Whole Foods.  “Through our strong balance sheet and robust cash flow, we self-funded our new store development and technology investments, and, in keeping with our capital allocation strategy, returned more than $1.1 billion to our shareholders through dividends and share repurchases.”

For fiscal 2017, Whole Foods is projecting sales growth of 2.5 percent to 4.5 percent, as well as flat-to-negative comps, declining as low as 2 percent.