Expansion pays off for Whole Foods in third quarter
sales from existing stores, helped natural foods retailer Whole
Foods Market to a 37 per cent hike in profits in Q3.
Whole Foods Market, the world's largest supermarket chain for organic and natural foods, on Wednesday said quarterly earnings surged a surprisingly strong 37 per cent, boosted by store openings and expansions and lower interest expense.
The retailer said net income in the fiscal third quarter ended 7 July rose to $22.1 million, or 36 cents a share, from $16.1 million, or 29 cents, year-ago period.
Third-quarter sales rose 21 per cent to $648.8 million, driven by a 17 per cent increase in square footage.
Sales from stores open at least a year - or same-store sales, a key measure of retailing performance - rose 10.5 per cent from the same quarter a year ago.
Capital expenditures totalled $35 million for the quarter of which $25 million was spent on new stores. The company operates 133 stores in the US and Canada.
Whole Foods said it paid down the balance on its line of credit by $57 million during the current quarter and by $121 million over the last four quarters. The company had about $170 million in long-term debt as of the end of the quarter. Since the end of the quarter, it paid down its credit facility by another $4 million, leaving about $216 million available on the line of credit.
Looking to its fiscal fourth quarter, Whole Foods said it expects sales growth of 17 per cent to 22 per cent, adjusted for the 13 weeks in the fourth quarter of fiscal year 2001. The company expects square footage to grow about 14 per cent and comparable store sales to increase 7 per cent to 9 per cent.
Comparable store sales are currently running above that range, the company said. However, Whole Foods said it is facing a difficult comparison with the 10.2 per cent increase in the prior year, and the uncertain economic environment makes it difficult to predict future sales trends.
The company said it plans to open two new stores during the fourth quarter. Due to the 12-week versus 13-week comparison and more difficult year-over-year comparisons, the company does not expect to produce the same level of basis point improvement in direct store expenses as a percentage of sales as it did in the first three quarters of the fiscal year.
Looking ahead to fiscal 2003, Whole Foods estimates sales growth at 15 per cent to 20 per cent.
