Whole Foods stays positive after shares slip

Whole Foods Market said total sales for the first quarter ended Jan. 19 climbed 10% to a record $4.2 billion. But those results reportedly missed analysts’ expectations, and the company has lowered its earnings outlook for 2014 as a result.



Momentum at Whole Foods — as well as shares — slipped. Comparable store sales for the quarter increased 5.4%, compared to a 7.2% increase in the prior year.



The company has revised its outlook for the year, and now expects sales growth of 11% to 12%, comparable store sales growth of 5.5% to 6.2% and diluted earnings per share of $1.58 to $1.65. The company’s prior outlook anticipated sales growth of 11% to 13%, comparable store sales growth of 5.5% to 7% and diluted earnings per share of $1.65 to $1.69.



The company also expects Easter to negatively impact comparable store sales growth in the second quarter and positively impact them in the third by an estimated 50-60 basis points, because the holiday will fall in the third quarter this year versus the second quarter last year.



Sales growth slowdown notwithstanding, the company’s growth initiative remains aggressive. Co-CEO Walter Robb remained positive and reiterated that he sees demand for 1,200 Whole Foods stores in the United States alone.



"With unparalleled quality standards, we are the leading retailer of fresh, healthy, natural and organic foods. We are very confident in our future growth potential and are moving aggressively to take advantage of that opportunity," said Robb. "With a base of 373 stores today and a record 107 stores in our development pipeline, we expect to cross the 500-store mark in 2017."



The company opened 10 stores in the first quarter and has opened two stores so far in the second quarter, expanding into five new markets. It plans to open an additional store in the second quarter and expects to open another 20 to 25 in the second half of the year. The company currently has 373 stores totaling approximately 14.2 million sq. ft.



The company recently signed 21 new leases totaling approximately 920,000 sq. ft., increasing its development pipeline to a record 107 stores. These leases are for new stores in Huntsville, Ala.; Vancouver, Canada; Brea, Calif.; San Diego, Calif.; Winter Park, Fla.; Kennesaw, Ga.; Schererville, Ind.; Lexington, Ky.; Charlotte, N.C.; Wall, N.J.; New York City, N.Y. (Bryant Park); Frisco, Texas; Tacoma, Wash.; and Wauwatosa, Wis. They also include leases acquired for seven Chicago-area locations formerly operated as Dominick's stores in Edgewater; Elmhurst; Evanston; Lincoln Park; Streeterville; West Loop; and Willowbrook.



Whole Foods’ expansion plans don’t seem limited to more stores in new markets. The company is adding non-organic, conventional produce into its stores to attract a broader range of consumers, according to reports — which should put the company in a position to compete more effectively.