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For the third consecutive quarter, Whole Foods Market posted a same-store sales decrease in its second fiscal earnings period ended April 10. The Austin, Texas-based chain's comp sales dipped 3 percent alongside a total sales increase to a record $3.7 billion during the 12-week timeframe.
Pointing to an "improved cost structure and expense disciplines," John Mackey, co-founder and co-CEO, said: “We produced record sales and operating cash flow, and returned $144 million of capital to our shareholders [via] strong EBITDA in a challenging sales environment. Food retailing is evolving at an incredibly fast pace, and consumers have more options than ever before. In addition to becoming more competitive on price, we are making measurable progress in fundamentally evolving our business and providing an enhanced experience for our customers across all platforms before, during and after their visit.”
WFM YTD Results
For the 28-week period ended April 10, 2016, total sales increased 2.5 percent to $8.5 billion while comparable-store sales decreased 2.3 percent. Average weekly sales per store were $698,000, translating to sales per gross square foot of approximately $940.
Growth and Development
In the second quarter, Whole Foods Market opened eight new stores, expanding into two new markets, while its third quarter includes five new stores along with an anticipated seven additional locations, among them the first 365 by Whole Foods Market on tap to open in Silver Lake, Calif., on May 25. In the fourth quarter, meanwhile, it expects to open five additional stores, including two 365 stores in Lake Oswego, Ore., and Bellevue, Wash.
The company recently signed nine new leases for six Whole Foods Market stores and three 365 stores. In addition, it has renegotiated three leases in development, converting them from Whole Foods Market stores to 365 stores. The three lease conversions average 29,000 square feet and are located in Bloomington, Ind., and Akron and Toledo, Ohio.
The Whole Foods Market leases average 49,000 square feet and are located in Santa Monica, Calif.; Miami, Fla.; Vernon Hills, Ill.; Jersey City, N.J.; Commack, N.Y.; and Nashville, Tenn. The new 365 leases average 30,000 square feet and are located in Long Beach, Calif.; North Hollywood, Calif.; and Decatur, Ga.
"Created to complement our Whole Foods Market stores, our new 365 format will offer our same industry-leading standards and dedication to food transparency in a streamlined format designed around affordability and convenience, and supported by enhanced digital experiences," observed Co-CEO Walter Robb
Noting that the first three 365 format stores will be invaluable to learn from and "evolve from there," Robb said that he and his executive cohorts "believe there is customer demand for both formats, and as a second-growth vehicle, 365 allows us to attack the value-quality proposition in a new way, while maintaining the integrity the Whole Foods Market brand represents in the marketplace."
Overall, the company sees potential for 1,200 Whole Foods Market stores in the United States, with the new 365 format expanding the growth opportunity beyond 1,200 stores.
In fiscal year 2015, the company had sales of approximately $15 billion and currently operates 446 stores in the United States, Canada and the United Kingdom.