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Whole Foods targets Millennials with new store concept

5/6/2015

Whole Foods Market set another sales record in the second quarter – but that’s not enough for the grocery chain, which announced it is launching a new store concept targeted to the Millennial shopper.


The retailer reported that for the second quarter ended April 12, total sales increased 10% to a record $3.6 billion. Same store sales increased 3.6%, including an estimated 50 basis point positive impact from Easter shifting from the third quarter last year to the second quarter this year. Earnings before interest, taxes, depreciation and amortization were $355 million, or 9.7% of sales.


"Our results reflect another quarter of record sales and healthy returns on invested capital," said John Mackey, co-founder and co-chief executive officer of Whole Foods Market. "Our Whole Foods Market brand has helped lead the shift in consciousness toward fresh, healthy foods by offering the highest quality, broadest selection, and best customer service, and we believe we can triple the number of Whole Foods Market stores in the United States. At the same time, we also see an opportunity to leverage our long history of retail innovation and extend our reach in the marketplace."


But the big news was the new store concept. The company says it is building a team to focus exclusively on this new concept and is currently negotiating leases. The plan is to begin opening stores next year, and given the more standardized design and product assortment, the company said it expects a fairly rapid expansion from there.


"We are excited to announce the launch of a new, uniquely-branded store concept unlike anything that currently exists in the marketplace," said Walter Robb, co-chief executive officer of Whole Foods Market. "Offering our industry-leading standards at value prices, this new format will feature a modern, streamlined design, innovative technology and a curated selection. It will deliver a convenient, transparent, and values-oriented experience geared toward millennial shoppers, while appealing to anyone looking for high-quality fresh food at great prices.


"We believe the growth potential for this new and complementary brand to be as great as it is for our highly successful Whole Foods Market brand," added Robb. "We look forward to sharing more details about this exciting new venture sometime before Labor Day."


In the second quarter, Whole Foods opened 11 new stores, including three relocations and three former Dominick's locations. The company recently signed nine new leases, including two relocations and one new market. These leases are located in Jacksonville Beach, FL; Atlanta, GA (two leases); Detroit, MI; Rochester, NY; Houston, TX; Park City, UT; and Washington, D.C. (two leases).


The company currently has 417 stores totaling approximately 16 million square feet and expects to cross the 500-store mark in fiscal year 2017. Longer term, the company says it sees demand for at least 1,200 Whole Foods Market stores in the United States.


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