Whole Foods Q2 profit tops even as sales slow; expanding rewards program

Whole Foods Market reported better-than-expected earnings for the second quarter amid cost controls that helped lessen the impact of slowing sales.



Net income was a better-than-expected $142 million for the quarter ended April 10.



Sales inched up 1.3% to $3.7 billion, slightly below estimates.



Same-store sales for the quarter dropped 3%, more than analysts has expected, as the chain felt the impact of lower prices on items like fruits and vegetables and ever –increasing competition in the organic grocery sector. It was the third consecutive month of same-store sales declines.



Whole Foods is just three weeks ago from the debut of its streamlined, value-priced format, 355 by Whole Foods Market, with the first store opening on May 25 in Silver Lake, California. While some industry experts have speculated the new brand may cannibalize sales from traditional Whole Foods stores, company executives continue to dismiss those concerns.



“We believe there is customer demand for both formats, and as a second growth vehicle, 365 allows us to attack the value-quality proposition in a new way, while maintaining the integrity the Whole Foods Market brand represents in the marketplace,” said Walter Robb, co-chief executive officer of Whole Foods Market.



The Silver Lake store will be followed by openings in Lake Oswego, Oregon and Bellevue, Washington.



“We are excited to learn from these first three stores and evolve from there,” said Robb.



On a conference call with analysts, the grocer said it will bring its customer rewards program, which it piloted in 2015 in the Philadelphia area, to the Dallas market. Based on the Dallas pilot, it will take the program national.



Whole Foods currently has 446 stores in the United States, Canada, and the United Kingdom.