July 27, 2011 / 8:33 PM / 6 years ago

Whole Foods boosts 2011 view, shares up

3 Min Read

LOS ANGELES (Reuters) - Upscale grocer Whole Foods Market Inc's (WFM.O) quarterly profit rose a larger-than-expected 35 percent and it raised its full-year profit forecast, fueled by robust sales and snatching market share from other supermarkets.

Shares of the biggest U.S. seller of organic and natural food products rose 4.4 percent in after-hours trade.

Whole Foods' report, issued on Wednesday, eased worries that the sales growth that has driven a healthy 60 percent gain in the stock over the past year could slow.

Net income for the fiscal third quarter ended July 3 rose to $88.5 million, or 50 cents per share, from with $65.7 million, or 38 per share, in the year-earlier period.

Sales rose 11 percent to $2.4 billion. Closely watched identical-store sales, which exclude relocations and expansions, jumped 8.1 percent.

"Sales momentum has been maintained, no doubt about it," said BB&T Capital Markets analyst Andy Wolf, who noted that quarter-to-date identical-store sales at Whole Foods are up 9.3 percent.

Wolf said Whole Foods' upper-end consumers appear to be maintaining their shopping habits despite higher prices for food and fuel.

"We are continuing to gain market share at a faster rate than most public food retailers," Walter Robb, Whole Foods' co-chief executive, said in a statement.

Whole Foods was harder hit than rivals such as Kroger Co (KR.N), Safeway Inc SWY.N and Supervalu Inc (SVU.N) when the U.S. economy slid into recession.

The downturn and resulting contraction in consumer spending prompted Whole Foods to revamp its pricing to focus on value. The company, known by some as "Whole Paycheck," has since emphasized lower-priced store brands and recently rolled out "extreme value" items like wines that sell for around $3.

Those steps were behind a turnaround at Whole Foods, helping it to keep pace with other large supermarket chains.

Kroger in its latest quarter had a 4.6 percent gain in identical-supermarket sales, while Safeway posted a 0.5 percent rise. Supervalu saw its identical-supermarket sales drop 3.9 percent.

Based on its strong results, Whole Foods raised its full-year earnings forecast to $1.91 to $1.92 per share from $1.87 to $1.90 per share previously.

It also forecast fiscal 2012 earnings of $2.21 to $2.26 per share.

Shares of the Austin, Texas-based grocer jumped to $68.30 in extended trading after closing the regular session at $65.43.

Reporting by Lisa Baertlein, editing by Bernard Orr

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