The Wall Street seems to have taken a special interest in Whole Foods Market (WFM, Financial) stock after its came out with the better than anticipated numbers for fiscal 2015 first quarter. The stock jumped to a 52-week high during the midday trading and reached $56.77, and finally closed at $56.06, up 5% from its previous close.
At the end of the quarter Whole Foods organic food spread included more than 25,000 certified organic items and over 8,500 non-GMO (genetically modified organisms) project verified products. The company was able to achieve this within two years since its announcement to commit to full GMO transparency. However, this wasn’t the only achievement for the organic food retailer. Let’s take a quick look at what all went on during the quarter.
A peek into the quarter
For the quarter ended January 18, 2015, Whole Foods reported total sales of $4.7 billion, translating into a 10% increase over prior year period. Even the bottom-line figure witnessed growth of 5.6% at $167 million. Earnings per share came to $0.46, up 10% year on year. The growth in the top-line was primarily driven by the comparable store sales growth of 4.5% and square footage growth of 9.4%.
“For the last eight quarters, our new store classes averaged sales per square gross square foot of $709 translating the productivity levels of 82% on a weighted square footage basis… Comp stores less than two years old have averaged 17% comps and most importantly a 14% return on invested capital well in excess of our weighted average cost of capital.” – Walter Robb, Co-CEO
Whole Foods Market’s comparable store sales results. Source: Whole Foods Press Release
During the quarter, the company opened nine new stores which includes two relocations and entry into one new market. Since the end of the first quarter Whole Foods has opened another three new stores, and with these, the company presently has a total of 408 stores, which is expected to cross the 500-store mark by fiscal 2017.
Over all, the management was pleased with the first quarter performance as the company’s market share continued to improve and got a strong start to the fiscal. Walter Robb, during the first-quarter earnings call, mentioned that with broad-based momentum across departments, storage, classes and regions, the company believes its many strategic initiatives along with improving consumer confidence are collectively contributing to its improved results.
Reasons to rejoice – major takeaways
The quarter turned out to be an eventful one for “America’s Healthiest Grocery Store.” In October Whole Foods launched the “Value Matters” national campaign which went viral on social media and video streaming websites. The campaign focused on the retailer’s ground breaking quality standards and highlighted its key achievements in the world of organic food. The smart and catchy ads resulted in a higher level of understanding on the consumer’s part regarding how Whole Foods is different, leading to greater amount of loyalty in them for the brand. The ads also gave the company the edge over its competitors as the general public’s intent to shop at Whole Foods increased.
Another key development of the quarter was the $1 million average weekly online delivery sales mark that Whole Foods crossed. Compared to its peers, the company now delivers fresh groceries to more homes in America, resulting in the huge online sales growth. Currently the online delivery sales account for as much as 5% of total sales in some of the stores, and while the figure may not look much right now, it actually paints a picture of a very promising future.
Next, coming to Apple (AAPL, Financial) Pay, the platform has turned out to be a huge hit among Whole Foods customers. “This payment option has grown quickly to 2% of sales which we expect will continue to increase especially after the Apple Watch launches this year,” said Walter during the earnings call. The platform to an extent also helped to expand sales, helping the Texas-based retailer to become the largest Apple Pay retailer both in terms of number of transactions and sales. Another factor that bolstered sales was the new and improved Whole Foods Market app. To date already 600,000 downloads have taken place across smartphone platforms, helping users to access personalized offers and information. The management is excited about all these developments and are looking forward to many more of such features.
