LOS ANGELES Whole Foods Market Inc WFMI.O posted quarterly profit that beat Wall Street's high expectations and boosted its full-year forecasts as its affluent customers came out of hiding, sending its shares up more than 5 percent.
The Austin, Texas-based seller of organic and natural foods on Wednesday said closely watched same-store sales rose 8.7 percent in the fiscal second-quarter and were up an even stronger 9.5 percent so far in the current quarter.
"That's an impressive clip," said Edward Jones analyst Matt Arnold.
Other upscale retailers, ranging from jeweler Tiffany & Co (TIF.N) to department store owner Nordstrom Inc (JWN.N) and Urban Outfitters Inc's (URBN.O) clothing store Anthropologie, have seen sales improve as high-income shoppers grow more confident that the U.S. economy is on the mend.
"This company caters to a more affluent customer and it shows," said Arnold. "What a bifurcation between what the traditional grocers and these guys have to say right now."
To that end, Whole Foods' mainstream rivals Safeway Inc SWY.N, Kroger Co (KR.N) and Supervalu Inc (SVU.N) each have disappointed Wall Street with their 2010 profit forecast
Whole Foods also said it promoted Walter Robb to share the chief executive role with co-founder John Mackey, effectively immediately.
Robb had shared the roles of president and chief operating officer with A.C. Gallo since October 2004. Whole Foods executives manage by consensus and Mackey said on a conference call that Robb's promotion did not signal a change.
"I'm sticking around a whole lot longer," Mackey said.
PROFIT ALMOST DOUBLES
Whole Foods, which said it is seeing shoppers "selectively trade up" to more expensive items, said profit nearly doubled to $67.5 million, for 39 cents per share, for the fiscal second quarter ended April 11.
Analysts, on average, had expected a profit of 33 cents a share in the latest quarter, according to Thomson Reuters I/B/E/S.
"We have successfully emerged from this recession with a healthier balance sheet and better capital disciplines," Mackey said.
Sales grew more than 13 percent to $2.11 billion.
The company's new 2010 forecast calls for same-stores sales growth target to 6 percent to 7 percent and earnings of $1.33 to $1.37 per share. Its prior outlook called for same-stores sales growth of 3.5 percent to 5.5 percent and per-share earnings of $1.20 to $1.25.
It also raised its identical-store sales growth target to 5.5 percent to 6.5 percent from 2.9 percent to 4.9 percent.
Same-store sales measure sales at stores open at least a year, while identical-store sales exclude stores that have moved or been renovated.
Canaccord Adams analyst Scott Van Winkle said the company's new full-year view looked "a touch conservative" for the second half of the year given current trends.
Shares of Whole Foods, which closed at $40.25 on the Nasdaq, rose to $42.40 in after-hours trade. At the close of business on Wednesday, the stock was up almost 47 percent year-to-date.
(Reporting by Lisa Baertlein; Editing by Tim Dobbyn, Leslie Gevirtz)