Whole Foods Market said it is using pricing data tracking and research to help it make strategic and targeted price investments.
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The organic and natural food retailer yesterday (4 November) posted an increase in full-year profit but said lower selling prices could negatively impact its sales going forward.
Sales for the 52-week period increased 1% to reach $8bn, however, identical store sales, excluding 12 relocations and three expansions, decreased 4.3% versus a 3.6% increase in the prior year.
Speaking to analysts during a conference call, John Mackey, chairman, CEO, and co-founder of Whole Foods Market said the company’s internal benchmarking shows that it has maintained its price competitiveness against its national competitors during the fourth quarter.
Mackey added that the company had taken advantage of lower costs in certain areas, such as produce, to pass through “great values” to our customers, as well as national programmes for its cheese and packaged nuts brands.
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By GlobalData“The fact that our sales are moving in the right direction and we maintained healthy gross margins suggests we are continuing to strike the right balance between driving sales, improving our value offerings, and maintaining margin,” Mackay told analysts.
Whole Foods identical stores, excluding LIFO and asset impairment charges, store contribution improved 58 basis points to 7.6% of sales in the fourth quarter, driven by improvements in both gross profit and direct store expenses.
However, Mackay said: “While our sales comparisons will be easier in the first half of the year, we will have difficult expense comparisons due to the cost savings realized in 2009. In addition, with low comps, we don’t expect to realize the same year-over-year operating margin improvement in our younger stores that we have been able to produce in the past.
He added: “For these reasons, and given the likelihood of continued selective, strategic price investments, we expect operating margin in fiscal year 2010 to be in line with the 4.1% we produced in 2009, excluding non-cash asset impairment charges, legal and settlement costs, and store closure reserve adjustments.”
