Natural foods retailer Wild Oats Markets saw net income surge in the second quarter, as sales at three new stores opened earlier this year boosted revenue.
The company, which is planning to open 15-20 new stores in 2004, reported an increase of 45.7 per cent in net income to $2.2 million, on sales of $242.2 million, a rise of 2.6 per cent on last year's figure.
Sales in the second quarter were also boosted by the shift of the Easter holiday into the second quarter of 2003. First half 2003 sales were $478.2 million, a 1.9 per cent increase compared to $469.2 million in the same period last year. The sales gain was able to offset the sale or closure of four stores year-over-year.
However comparable store sales and customer traffic dropped considerably in the quarter, affected by the company's SKU reduction program, transition to a new private label program and remodeling and resetting activity, designed to strengthen the store base.
The increase in net income year-over-year was due to a reduction in direct store expenses, which offset a decline in gross margin, said Wild Oats. Net income for the first half of 2003 was $3.6 million, a 67.3 per cent increase on last year's first half.
Margins were affected by increased produce costs compared to last year; inventory mark-downs as the company closed two stores and sold through slow-moving inventory to make room for new products in existing stores; and a new direct mail campaign designed to increase awareness in key markets, the firm claimed.