Whole Foods healthier than thought

The nation’s leading natural and organic grocer proved its doubters wrong with a better than expected fourth quarter earnings report, a rosy outlook for the coming year and dedication to a long-term growth strategy.



Same store sales increased 3.1% in the company’s fourth quarter ended September 28 and the company disclosed its first quarter is off to a strong start with same store sales up 4.6% through November 2 thanks to balance of traffic and ticket growth. Total company sales increased 9% during the fourth quarter to a record $3.3 billion while profits increased 5.8% to $128 million from $121 million. Earnings per share increased 9.4% to 35 cents from 32 cents, three cents better than analysts expected.



Helping to drive fourth quarter sales growth was the opening of a record 13 new stores and expansion into seven new markets. The contribution of the new stores would have been even greater, but nine of the openings came within the final month of the quarter.



For the year, the company opened 38 new stores to end with 401 stores and reaffirmed that the U.S. can ultimately support 1,200 stores. Moving toward that goal in the first quarter, Whole Foods has opened three new stores so far and plans six more out of a total 2015 fiscal year plan which calls for 38 to 42 new stores. The addition of new stores and plans for a low to mid single digit same store sales increase are expected to result in full year sales growth of 9%.



"The last few months have been an incredibly exciting and rewarding time for our company as we opened a record number of new stores and launched several strategic initiatives, expanding choices for our customers and reinforcing our values as America's healthiest grocery store,” said John Mackey, Whole Foods co-found and co-CEO. “Collectively, our efforts have led to extremely high team member morale, heightened brand visibility and positive sales momentum.”



Mackey’s counterpart, Walter Robb, weighed in on Whole Foods differentiation philosophy and value proposition as the key drivers of the company’s favorable long term prospects.



“Natural and organic products are increasingly available, yet no one offers the shopping experience we offer. We hold the idea of 'food' to a higher standard, banning more than 75 ingredients commonly found in other stores, and we believe our unparalleled quality standards are a large part of why we maintain a broad base of loyal customers and attract new customers aspiring to a natural and organic lifestyle," Robb said. "As we accelerate our growth, we are evolving and differentiating our shopping experience faster than ever before. Our leadership in retail innovation is one of our many competitive advantages, and it is exciting to see our new stores from Palm Desert, California to Toronto, Canada perform so well."



As Whole Food pursues its growth agenda, the company also said it was shifting its conversation with the investment community. The company said it would focus on a broader directional point of view and metrics it believes are key to the long-term health of the company and no longer provide regular quarterly updates to its annual targets.