The world’s number one natural foods chain, Whole Foods Market, has reported strong first quarter revenue of US$58.3, with a net income increase of 26%.

Income growth is higher than the 22% sales increase, up to $1.7bn, and includes a $1.1m share based compensation expense. “We had a significant increase in investment income due to a large increase in our cash balance; however, this is not expected to continue as we paid out $299m in cash dividends to shareholders subsequent to the close of the quarter,” said John Mackey chairman, chief executive officer and co-founder of Whole Foods Market.

The company reported diluted earnings of $0.40 per share, an increase of 17%. “Our above-average 5% increase in fully diluted shares outstanding year over year was due to a significant 61% increase in our average stock price over that time, along with an increase in stock option exercises following our September 2005 accelerated vesting,” Mackey said.

The company reiterated its guidance for the 2006 FY, stating that it anticipates sales growth of between 18% and 21%, with earning-per-share growing at a slightly lower rate because of a 5% to 6% increase in shares outstanding.