Whole Foods Q1 Sales, Profits, Exceed Expectations

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Whole Foods Q1 Sales, Profits, Exceed Expectations

Things are looking up for natural and organic foods retailer Whole Foods Market, Inc., which saw first-quarter growth that surprised even its own CEO.

“Our first-quarter results exceeded our own expectations on both the top and bottom line,” said John Mackey, CEO and co-founder of Austin, Texas-based Whole Foods. “Given the strong sales momentum we are seeing, there are many reasons to be bullish about our future results. It is relatively early in our recovery, however, and there is still a lot of uncertainty regarding where the economy, the consumer and competition go from here. Our raised outlook for the fiscal year reflects our cautiousness on the low end and our optimism on the high end. As the world moves out of this recession, we believe we are well positioned to produce strong returns for our shareholders.”

The grocer’s sales for the 16-week first quarter ended Jan. 17 increased 7 percent to $2.6 billion, while comparable-store sales increased 3.5 percent. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 26 percent to $186.0 million.

“Early last year, we made the shift from being fairly reactionary on pricing to being much more strategic,” said Mackey. “We have seen this strategy successfully play out over the last several quarters, as we have produced strong year-over-year improvement in gross margin and comparable-store sales growth. While many of our competitors have gone back and forth on their pricing strategies, we remain focused on continuing to strike the right balance between driving sales over the long term by improving our value offerings while maintaining margin.”

Whole Foods opened six stores and closed one former Wild Oats store in the first quarter, and currently operates 289 stores totaling 10.7 million square feet. Three stores are expected to open in the second quarter.

For the 20 weeks ended Feb. 14, total sales increased 7.8 percent, with comparable-store sales increasing 4.2 percent.

Based on these figures, Whole Foods raised its sales outlook for the rest of the year. The retailer noted, however, that the economic outlook remains uncertain, and it faces a significantly higher hurdle starting in the third quarter as identical-store sales improved 224 basis points from the first half to the second half of fiscal year 2009.

Whole Foods operates 289 stores in the United States, Canada, and the United Kingdom.