Tags: Whole Foods | Profit | Prices | Shoppers

Whole Foods Profit Climbs as Lower Prices Draw Shoppers

Wednesday, 05 Nov 2014 05:19 PM

Whole Foods Market Inc., which just introduced its first national advertising campaign, posted fiscal fourth-quarter profit that topped analysts’ estimates as lower prices lured shoppers.

Net income rose 5.8 percent to $128 million, or 35 cents a share, the Austin, Texas-based company said Wednesday in a statement. The average of analysts’ estimates compiled by Bloomberg was 32 cents. Revenue gained 9.4 percent to $3.26 billion in the period ended Sept. 28, matching projections.

Whole Foods has focused on lowering produce prices and increasing advertising to boost revenue and draw more budget-conscious Americans. Sales at stores open at least 53 weeks rose 3.1 percent, matching the average of analysts’ estimates compiled by Consensus Metrix. Comparable-store sales were up 4.6 percent in current quarter through Nov. 2.

“Same-store sales have accelerated so far in the first quarter — that tells people, OK, maybe business is starting to come back,” said Brian Yarbrough, an analyst at Edward Jones & Co. in St. Louis, who recommends buying the shares. “The lowering of prices is starting to work.”

Whole Foods shares advanced on the news, which was reported after regular stock trading ended Wednesday. Shortly after 5 p.m. in New York, the shares were up 6.9 percent at $42.75, after rising 0.5 percent to end the regular session at $39.99. Whole Foods had lost 31 percent this year through Wednesday’s close, compared with a 9.5 percent gain for Standard & Poor’s 500 Index.

Whole Foods has been making progress cutting prices and shedding its “Whole Paycheck” image. A Bloomberg Intelligence study recently found that a basket of 97 grocery items from Whole Foods in New York City was cheaper than the same group of items from rivals such as Fresh Direct and Gristedes.

Sales Forecast

Sales this fiscal year will increase by at least 9 percent, the company said today. That’s equivalent to about $15.5 billion, while analysts project $15.8 billion, on average.

Competitors have been advertising more organic fare to boost sales. Kroger Co. sells organics including chicken, beans and milk under its Simple Truth brand. Sprouts Farmers Market Inc.’s third-quarter sales, which the company reports tomorrow, are projected to have risen 21 percent, according to estimates compiled by Bloomberg.

Whole Foods has about 400 stores in the U.S., Canada and the U.K. and is focused on expanding into new areas. The company opened 13 new locations in seven new markets in the quarter. There’s the potential for 1,200 Whole Foods stores in the U.S. long term, the company said.

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Whole Foods Market Inc., which just introduced its first national advertising campaign, posted fiscal fourth-quarter profit that topped analysts' estimates as lower prices lured shoppers.
Whole Foods, Profit, Prices, Shoppers
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2014-19-05
Wednesday, 05 Nov 2014 05:19 PM
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