Markets Don’t Cheer Whole Foods Market, Inc. (NASDAQ:WFM) Numbers
A leading natural and organic foods supermarket, Whole Foods Market, Inc. (NASDAQ:WFM) posted better than expected 4Q13 bottom line results with reported earnings of $0.32 per share, up 7% from $0.3 per share in 4Q12. The street had anticipated earnings of $0.31 per share. The company continued its top-line growth momentum with revenue at $2,976 million, up 2% year over year but below the consensus estimate of $3,036 million. The company reported 10.8% sales growth on a comparative 12 week basis.
Whole Foods reported the increase in comparable store sales at 5.9% during 4Q13 continuing the soft growth company reported throughout FY13. Comparable store sales grew 5.8% even during first 5 weeks of 1Q14. Identical-store sales grew 5.5%, lower than the 6.7% reported in the preceding quarter. For the first 5 weeks of 1Q14, the identical store sales climbed 5.2%. The store contribution also jumped to $305 million or approximately 7% and about 43 basis points to 10.3% of sales.
The company reported 3% increase in gross profit to $1,061 million and 37 basis points growth in gross margin at 35.6%. This was attributed to decrease in cost of goods sold and occupancy costs as a percentage of sales. Operating income grew 9% to $192 million, operating margin increased 6.5% or 50 basis points and adjusted EBITDA to $298 million or 8%. The company reported improved sales and profits as a result of effective inventory management and improved store-level performance.
Whole Foods is revamping its pricing with more focus on value offerings and maintaining healthy margins and market share as other prominent players including Sprouts Farmers Market Inc. (NASDAQ:SFM), are expanding their presence. Comparable store sales at 5.9% reported for 4Q13 is well below its recent trend of about 7%. Sprouts announced its better than expected 3Q13 earnings and sales yesterday. The company reported same store sales increased 10.2% in stores open at least a year and raised its full year guidance to 9%-9.5% against its prior outlook of 8.5% to 9%.