AUSTIN, Texas—Whole Foods Market Inc. (NASDAQ: WFMI) reported results for the third quarter of 2010 (3Q10), ended July 4. Sales were up 15 percent compared to the same period in 2009, topping $2.2 billion. Comp store sales rose 8.8 percent, while identical store sales, excluding three relocations, increased 8.4 percent. The company also saw an 88 percent increase in income available to common shareholders, hitting $65.7 million, while diluted earnings per share increased 53 percent to $0.38.
“We are pleased with our results, which compare very favorably to most other food retailers and show we are continuing to gain market share," said John Mackey, co-CEO and co-founder. “Despite tougher comparisons and the recent dip in reported consumer confidence, our two-year stacked identical sales also sequentially increased to 4.6 percent."
Cash flow and investments were also on the move, with $117.9 million in cash flow from operations produced during 3Q10; Whole Foods invested $52.7 million in capital expenditures, $32.4 million of which was related to new stores. In fact, the chain continued its store growth initiatives during the quarter, opening six stores and acquiring two. Whole Foods also announced six new leases, averaging 34,000 square feet, in San Francisco, CA; Boise, ID; Minneapolis; Austin, TX (two sites); and Washington DC. The company has eight leases in negotiation, as it plans to accelerate the rate of new store openings by 2012.
During the third quarter, Whole Foods also divested two operating stores, one non-operating store and certain intellectual property (IP) as per the company’s agreement with FTC after the chain’s acquisition of the Wild Oats Market chain. The move closes the books on the antitrust settlement Whole Foods Market reached with FTC, and the retailer has no further obligation to the agency.
Whole Foods is aiming to build on its positive momentum. “We are projecting steady sales growth for next year and are committed to delivering incremental operating margin improvement as well as earnings growth in excess of sales growth," said Walter Robb, co-CEO. In preliminary expectations for fiscal year 2011, Whole Foods is looking at continued sales growth in the 10 to 13 percent range, with similar comp store sales growth (5 to 7 percent) and G&A expenses. It expects to see a rise in EBITDA to the $775 million to $790 million range, and a decrease in net interest expense—around $21 million—after repaying $210 million of its term loan in 3Q10 and the five-year interest rate swap agreement on the remaining $490 million expiring on Oct. 1, 2010.
