Whole Foods Market Inc (WFM.O) reported quarterly profit that topped Wall Street's view after sales at established stores defied the softening U.S. economy, sending the upscale grocer's shares surging 11.5 percent in an after-hours relief rally.
Investors had worried that Whole Foods' industry-leading same-store sales would cool, especially after top-performing restaurant chain Chipotle Mexican Grill Inc (CMG.N) flagged decelerating growth at its restaurants open at least 13 months.
Whole Foods shares lost nearly 7 percent of their value after Chipotle's July 19 results sparked concern the relatively affluent consumers who frequent them were reeling in spending.
Walter Robb, co-chief executive officer of Whole Foods Market, said the company's results ran counter to that theory.
Robb told Reuters that Whole Foods' "bigger basket" customers - generally higher-end, loyal shoppers who buy more items and spend more per visit - increased purchases during the quarter.
"In an economic environment that is proving to be difficult for many retailers, we are thriving," he said.
The Austin, Texas-based retailer, the biggest U.S. grocery chain that focuses on organic and natural foods, has lured well-heeled shoppers away from supermarkets such as Kroger Co (KR.N), Safeway Inc SWY.N and Supervalu Inc (SVU.N). Left with more price-sensitive shoppers, those mainstream grocers are fighting for every sale.
Robb said Whole Foods would continue to gain market share by further differentiating shopping at its stores, improving competitive pricing and reinforcing its brand as "America's healthiest grocery store."
Net income at Whole Foods was up 32 percent to $116.8 million, or 63 cents per share, for its fiscal third quarter that ended July 1, topping analysts average estimate by 2 cents per share, according to Thomson Reuters I/B/E/S.
Same-store sales at Whole Foods, the biggest U.S. grocery chain that focuses on organic and natural food products, were up 8.2 percent - roughly in line with the 8.4 percent gain analysts expected, according to Thomson Reuters data.
Those results were boosted by an increase in visits from shoppers, who are concentrated among Millennials - the generation approaching age 30 - and Baby Boomers who are retired or approaching retirement.
Whole Foods' total sales for the quarter rose almost 14 percent to $2.7 billion.
Based on the third-quarter beat, Whole Foods raised its full-year earnings forecast to a range of $2.51 to $2.52 per share, up from $2.44 to $2.47 per share previously.
Whole Foods shares jumped to $94.25 after hours from their close of $84.53.
(Reporting by Lisa Baertlein in Los Angeles; editing by Leslie Gevirtz, Tim Dobbyn and Andre Grenon)