Whole Foods Market profits up but may not last
a 27 percent leap in net income for 1Q 2005 to $49.1 million, but
is doubtful that this growth will continue throughout the year due
to expenses associated with new store openings.
Diluted earnings per share increased 21 percent to $0.73 and sales for the 16-week quarter ended 16 January were $1.37 billion, an increase of 22 percent on top of a 21 percent rise last year.
"We are very pleased with our performance this quarter, particularly in light of our difficult year-over-year comparisons," said chairman and CEO John Mackey. "However we do not expect to see this same level of year over year increases in sales and earnings to continue throughout the year."
The company expects sales growth of 15 percent to 20 percent for the full fiscal, driven by comparable store sales growth of 8 percent to 10 percent and weighted average square footage growth of approximately 15 percent.
It plans to open between 15 and 18 new stores (including four relocations) throughout the fiscal year and has already signed leases for seven new stores, two of which are re-locations, in Q1.
Diluted earnings per share growth for the year are expected to be lower than sales growth, mainly because of the cost of these openings - between $18 and $20 million. In addition to these expenses, Whole Foods points out that new stores tend to have lower gross margins than mature stores, which may negatively impact overall store contribution.
After opening three new stores in Hingham, MA, Redwood City, CA and Sarasota, FL the company ended Q1 with a total of 166 stores in the US, Canada and the UK and a combined square footage of 5.3 million.
