Whole Foods emerging from recession “faster” than peers

Posted by Josette Dunn on 14th May 2010

US natural and organic retailer Whole Foods Market claimed that it is emerging from the recession “faster” than its peers as it booked a strong increase in sales for the second quarter of fiscal 2010.

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The company said that it had benefited from shoppers “selectively trading up” on Wednesday (12 May) when it unveiled a 13% increase in total sales, which rose to US$2.11bn in the three month period.

Speaking to analysts during a conference call, co-CEO John Mackay emphasised that ID sales on a stacked two-year basis rose 1.9%, the first positive two-year result since the beginning of fiscal 2009.

“As the economy and consumer confidence improves, we are gaining back customers at a faster rate than our competitors,” Mackay said.

“Our strong sales results were broad-based across most regions, age of stores, and store teams. Our value work in perishables clearly has resonated with our customers as evidenced by our perishable comps showing strong rebounds year over year and outpacing our store average.”

Sales gains were driven by increased transaction numbers and basket size, while pricing remained flat.

Mackay said that this was a significant indication of the improving health of US consumer sentiment, as Whole Foods was able to report its first increase in basket size since the fourth quarter of 2008.

“Customers are still seeking value as demonstrated by continued strong sales growth in promotional and private label items; however, branded product sales growth has now outpaced private label growth for the last two quarters, and we are seeing some indications of customers starting to selectively trade up to higher-priced items in certain areas,” he said.

Mackey said he is “cautiously bullish” about the remainder of the year and the company raised its EPS outlook to $1.33-$1.37, up from its previous guidance of $1.20 to $1.25.

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