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Cost-cutting, solid sales, and positive free cash flow contributed to a successful fiscal first quarter for Whole Foods Market, and the retailer’s stock jumped 34.5 percent on news that it beat Wall Street estimates.
Sales for the quarter ended January 18, were $2.5 billion, a 1 percent increase over 2008, excluding $15.6 million of sales from 13 subsequently closed Wild Oats stores. Comparable store sales, however, decreased 4 percent versus a 9.3 percent increase in the prior year.
"The difficult strategic decisions we made last August to contain costs and cut capital spending are helping us successfully manage through this challenging economic environment," said John Mackey, chairman, CEO, and co-founder of Whole Foods. "Despite flat sales in the first quarter, our EBITDA was approximately equal to last year; we produced strong cash flow from operations, and we generated $31.8 million of positive free cash flow. We are demonstrating we can operationally adjust to lower sales volumes and believe that this flexibility, combined with our improved balance sheet, will enable us to emerge stronger and better positioned over the long term."
Whole Foods saw earnings of $27.8 million, or 20 cents per share for the quarter, 28.9 percent below the $39.1 million, or 28 cents per share, reported last year. The quarter included $11 million, or 5 cents per share, in legal costs related to the retailer’s acquisition of grocer Wild Oats.