Whole Foods Market Q3 Conference Call Highlights
Whole Foods Market (NASDAQ: WFM) released its third quarter earnings on Wednesday. Shares of the company are down 2.1 percent.
Below are some key highlights from its conference call:
• Year-over-year our quarterly sales grew $320 million to a record $3.4 billion.
• We increased operating square footage 10 percent to 14.6 million, expanding our reach to 386 stores across 41 states and three countries.
• We produced average weekly sales per store of $736,000, translating to another quarter of record sales per gross square foot over $1,000.
• Our 3.9% comp increase reflects continued headwinds from our value efforts, cannibalization, competition and the economy.
• Our comp increase was driven by approximately equal increases in transaction count and basket size.
• Our average price per item growth was approximately 2 percent.
• On the cost side we saw spikes in some categories.
• As we continued to invest in growth, value and technology, we maintained our expense disciplines, resulting in near record results of 11.1 percent store contribution and 7.5 percent operating margin.
• We produced a 16.4 percent return on invested capital and strong operating cash flow of $240 million.
• 7.5 percent operating margin.
• For the last eight quarters, our new store class has averaged weekly sales per store of $503,000.
• We believe the 116 stores in our development pipeline will continue to generate similar returns.
• We are on track for 38 new stores this year, a 10 percent increase in ending square footage growth.
• We expect to cross the 500-store mark in 2017, and over the longer-term see demand for 1,200 Whole Foods Market stores in the U.S. alone.
• Second, over the next year, we will refresh approximately 70% of our stores over 10 years old.
• Third, we believe our value efforts continue to be a key element in driving sales growth over the long term.
• We will continue to increase our value efforts and expect gross margin to return to our historical range of 34 percent to 35 percent over the next several years.
• Fourth, we are pleased to announce plans to launch our first-ever national marketing and brand campaign this fall.
• Fifth, we are also moving forward with our digital roadmap to offer customers more choices and new ways to engage with us.
• First, we are expanding our reach to customers outside the stores.
• Second, in the coming weeks, we will be launching a test of our new affinity program.
• And third, we will be introducing a new and robust Whole Foods Market mobile app to dramatically improve our customer's digital and mobile experience.
• Turning now to our outlook for fiscal year 2014, we are reaffirming our earnings per share outlook for the year, which includes LIFO and our year-to-date share repurchases.
• For Q4, we estimate comps in the range of 2.5 percent to 3.5 percent and diluted earnings per share of $0.31 to $0.33.
• We are seeing signs of stabilization with 3.1 percent comps quarter to date, in line with our result for the last nine weeks of Q3.
• In terms of next year, our top- and bottom-line results depend largely on comps, and those are hard to forecast so far out right now.
• We continue to expect ending square footage growth of approximately 10 percent.
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