May 7 Whole Foods Market Inc said on
Tuesday store sales have rebounded as it expands efforts to
lower prices and reach beyond its core of upscale shoppers by
adding more locations, and its shares rose more than 8 percent
The news from the largest U.S. natural and organic grocery
chain dispelled concerns that its store sales were slowing due
to competition and sluggish U.S. economic growth.
Same-store sales, a key gauge of performance for retailers,
rose 6.9 percent for Whole Foods' fiscal second quarter that
ended April 14. So far this quarter, those sales are up 9.4
"The demand for fresh, healthy foods continues to grow,"
John Mackey, co-founder and co-chief executive officer of Whole
Foods Market, said in a statement.
About three weeks into the second quarter, Whole Foods had
said its same-store sales growth had cooled to 6.4 percent,
dampened by winter storm Nemo and a shift in the day of the week
of Valentine's Day. Analysts also attributed the slower growth
to the U.S. payroll tax increase that lowered take home pay.
This quarter's sales results got a 200 basis point boost
from Team Member Appreciation Double Discount Day, but still
showed the kind of improvement investors were seeking.
"Even though the 9.4 (percent gain) is more like a 7.4
(percent gain), it's still a pick up," BB&T Capital Markets
analyst Andy Wolf said.
The Austin, Texas-based retailer, which has been lowering
prices to better compete with mainstream grocers such as Kroger
Co and Safeway Inc and upstarts like Fresh Market
, said second-quarter net income grew 20 percent to $142
million, or 76 cents per share.
Total sales rose more than 13 percent to $3.03 billion.
The company, which recently won kudos for its plan to
require labels on genetically modified products by 2018, raised
its forecast for full-year earnings per share to a range of
$2.86 to $2.89 from $2.83 to $2.87.
Shares in Whole Foods, which hit an all-time high of $101.19
in October 2012, were up $7.69 at $100.49 in extended trading.
Analysts often compare Whole Foods to coffee chain Starbucks
Corp because both companies cater to relatively
wealthier customers who are exceptionally loyal.
Whole Foods customers were tested in January when in a radio
interview Mackey compared the U.S. healthcare reform law known
as Obamacare to fascism.
Mackey is the inspirational leader of the chain, but his
attitudes can sometimes run contrary to those of the customers
who frequent the 350-store chain with nearly $12 billion in
Thousands of customers threatened to boycott Whole Foods
over Mackey's Obamacare comments, but the company's
second-quarter results underscored how strong the Whole Foods
Brand has become.
"If I had another store nearby and it was apples to apples,
I would choose the other over Whole Foods. But they've created
such an exceptional shopping experience that I'm willing to
overlook (his comments)," said Bridgette King, 43, of Orlando,
Amanda Orr, 43, said Whole Foods' produce, wine and cheese
departments put those at rival markets to shame, and her kids
are hooked on the chocolate hemp milk she buys at Whole Foods.
There is also the convenience factor. There are three Whole
Foods stores within a mile of Orr's Washington, DC home. Still,
because of her annoyance with Mackey, she said she is determined
to quit the brand. "It will take some work to break up with
them, but I'm trying," Orr said.
Getting away from the chain is about to get harder. It plans
to open 12 new stores in the fiscal fourth quarter.
Over the long term, the company considers 1,000 stores to be
a reasonable indication of its market opportunity in the United