Whole Foods initiatives drive better results
February 22, 2010
Initiatives launched by Whole Foods Market, Austin, Texas, over the past few quarters are taking hold and helping turn around an operation that was hampered by the recession.
For the 16-week first quarter ended Jan, 17, 2010, sales increased 7.0% to $2.6 billion. Comparable store sales gained 3.5%, and identical store sales increased 2.5%. Income available to common shareholders advanced 79% to $49.7 million, while diluted earnings per share increased 62% to 32 cents.
In a conference call, as transcribed by SeekingAlpha, John Mackey, Whole Foods CEO, said the company is seeing shifts in customer behavior in the recovery, although not a wholesale departure from the frugal practices they adopted in the economic downturn. Those shifts helped results.
“In general, we are seeing customers celebrate holidays and special events, such as the recent Super Bowl, in a bigger way than they did in 2009,” he said. “We also are seeing a shift in buying patterns around bad weather. Last year, customers didn’t ‘stock up’ as they had historically. This year, not only are customers stocking up, they are restocking afterwards, as well. In comparing first quarter to fourth quarter, we saw a slight shift in sales to higher price tiers, which we attribute in part to the holidays, and, to a lesser degree, to customers trading down less. We are still seeing strong redemption rates for coupons featured in our Whole Deal newsletter.”
Whole Foods is following up on an initiative it announced to focus more on healthy food at its stores. As part of that, it has begun a program in store-processed take out and refrigerated convenience food dubbed Health Starts Here that is “generating considerable customer interest,” Mackey said.
Mackey noted that Whole Foods could purchase natural meat at lower costs in the weak economy and passed savings on to customers That, with measures such as the lower-price program involving its private label brands, supported comparable and same store sales improvements. And he added, in the current quarter thus far, comps are up by 7.0% and idents by 6.0%.
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