Whole Food Market on Wednesday tempered its sales and earnings growth forecast for the current fiscal year after posting results below analysts’ expectations for its fiscal first quarter.
The Austin, Texas-based retailer said current projections call for sales growth for the year of 11% to 12%, with same-store sales up 5.5% to 6.2%. That compares with previous projections of up to a 13% increase in sales, with comps as high as 7%.
Whole Foods also projected earnings-per-share growth of 7% to 12%, versus previous projections of growth in the 12% to 15% range. In a conference call with analysts, Walter Robb, co-CEO of Whole Foods, said the lower end of the earnings range reflects reduced margins as the company seeks to be more price competitive.
The company is expanding its pricing efforts into more perishables categories, after concentrating on grocery items for the last few years during the economic downturn, Robb explained.
“In produce for example, we are adding more high-grade conventional offerings to complement organic offerings allowing customers a broader range of choices,” he said. “And in meat all of our U.S. stores now offer fresh package chicken under the 365 Everyday Value brand.
“Well recognized for value and quality by our customers, our 365 products tend to be the best sellers in most grocery categories, and we believe our chicken program will show similar results,” Robb said.
In the 16-week first quarter, which ended Jan. 19, Whole Foods reported that net income was up 8.2%, to $158 million, on a sales gain of 10%, to 4.2 billion. Comps were up 5.4%, with comps dipping to 5.2% in the last 11 weeks of the quarter.
The harsh winter weather in much of the country has impacted shopping patterns, the company said, with shoppers buyer more items per trip and making fewer trips.
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. One additional store is expected to open in the second quarter, with another 20 to 25 stores expected in the second half of the year. It currently has 373 store locations.
Whole Foods said it has recently signed 21 new leases, increasing its development pipeline to a record 107 stores. These leases are for new stores in Huntsville, Ala.; Vancouver, Canada; Brea, Calif.; San Diego; Winter Park, Fla.; Kennesaw, Ga.; Schererville, Ind.; Lexington, Ky.; Charlotte, N.C.; Wall, N.J.; New York City (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.