Whole Foods Q3 Sales, Profits Beat Estimates; Stock Jumps 11%

Sales and profits for Austin, Texas-based Whole Foods Market’s 12-week third quarter beat Wall Street estimates and drove the natural and organic food retailer’s stock up 11 percent in after-hours trading.

Whole Foods’ sales for the quarter ended July 5 increased 2 percent to $1.9 billion, while income from operations increased 23 percent to $78.9 million. Comparable-store sales, however, decreased 2.5 percent, compared with a 2.6 percent increase last year. Excluding the negative impact of foreign currency translation, comps decreased 2 percent.

“We saw our first sequential improvement in comparable-store sales trends in six quarters, driven by both average transaction count and basket size trends,” said John Mackey, chairman, CEO and co-founder of Whole Foods. “We believe we are continuing to strike the right balance between sales and gross margin while exhibiting strong cost control [and] producing a 23 percent increase in income from operations. We also generated $93 million of free cash flow, ending the quarter with $448 million in total cash and $335 million available on our credit line.”

For the 40-week period ended July 5, sales increased 1 percent to $6.2 billion, and comps decreased 3.8 percent, compared with a 6.4 percent increase for the same period last year. Year to date, the grocer produced $474.7 million in cash flow from operations and invested $252.1 million in capital expenditures, of which $196.9 million related to new stores.

Whole Foods opened four stores in the third quarter, three of which were relocations. So far in the fourth quarter, it has opened one store in Capitola, Calif., and currently has 282 stores totaling 10.4 million square feet. Two additional stores are expected to open in the fourth quarter.

Whole Foods operates 282 stores in the United States, Canada, and the United Kingdom.
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