Whole Foods Market (Nasdaq:WFMI) today announced sales and earnings for the fiscal quarter ended July 2, 2000.
Core retail sales during this 12-week period were a record $443 million, an increase of 23% over sales of $361 million for the same period of the prior fiscal year. This brings year-to-date core retail sales for the 40-week period to $1.4 billion, an increase of 23% over sales of $1.1 billion in the prior year.
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Comparable store sales increased 8.1% for the quarter and 8.6% year-to-date. Sales in identical stores (excludes 3 relocated and 1 remodeled store) increased 6.5% for the quarter and 7.2% year-to-date. The four relocated and remodeled stores saw an average 83% increase in square footage. As the Company continues to relocate smaller stores to larger boxes with better parking and visibility, it expects to continue to see a similar variance between comparable and identical sales increases.
Average Average % of Stores
size comps YTD in comp base
—————————————
Stores over five years of age 22,000 5% 54%
Stores between two and
five years of age 29,000 10% 35%
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By GlobalData Stores less than two
years of age 32,000 35% 11%
———————————————————————-
All stores (6.5 years of age) 26,000 8.6% 100%
“The strength of our new stores is definitely contributing to our comps,” said John Mackey, chairman and chief executive officer of Whole Foods Market. “But it is important to note that our more mature stores continue to show very impressive sales increases as well.”
Gross margins increased approximately 62 basis points to 34.8%. This improvement was in the cost of goods sold line and was seen across all departments. Ongoing initiatives in the areas of national purchasing, category management, and high execution in perishables continue to have a positive impact on gross margins.
Direct store expenses were up 70 basis points over the same quarter of last year. This increase is due entirely to the impact of the 28 new and acquired stores added to the store base over the last four quarters. Direct store expenses at existing stores were flat year over year.
Core retail net income for the quarter increased to $13.4 million from $12.0 million in the prior year, and diluted earnings per share increased to $0.49, compared to $0.44 in the prior year. Year-to-date core retail earnings for the 40-week period were $38.7 million, or $1.43 compared to $34.7 million, or $1.26, in the prior year. Store contribution for the quarter was 9.6% of sales. Excluding new and acquired stores, store contribution for the quarter was 11%.
Results of core retail operations for the twelve-weeks are as follows (in millions except percentages and per share data):
3Q00 3Q99 % Change
——————– ——–
Sales $ 442.6 $ 360.7 23%
Income from operations before
pre-opening and interest expense $ 28.6 $ 22.3 29%
Pre-opening expense $ 2.3 $ .8 185%
Effective tax rate 42% 39%
Net income $ 13.4 $ 12.0 12%
Diluted EPS $ 0.49 $ 0.44 13%
During the third quarter, the Company opened two new stores in Cary, N.C., and Edgewater, N.J., and relocated a store in Houston, Texas. The Company expects to open five stores during the fourth fiscal quarter to end the year with 117 stores. The Company is pleased to announce it has signed leases for two new stores in Kansas City, Kan., and Sonoma County, Calif., and currently has 25 stores in development averaging 35,000 square feet in size.
In June the Company announced that it was exiting from directly participating in e-commerce through the merger of the Internet businesses of WholePeople.com and Gaiam Inc. into a new company, Gaiam.com, of which WholePeople.com would own 49.9%.
In the third quarter, WholePeople.com recognized an after-tax charge of approximately $15 million, which consists of the write-off of the Web site, expenses associated with the transfer of Internet operations to Gaiam.com, and severance for the 177 team members that were laid off in relation to the restructuring.
WholePeople.com’s after-tax loss in the third quarter was approximately $7.4 million, excluding that one-time charge. Of this total loss, Amrion’s loss was approximately $3.5 million, including an inventory write-off of $1.4 million after tax.
The Company recently negotiated an expanded $195 million credit facility funded by a consortium of financial institutions led by Chase Bank of Texas.
The Company is pleased to announce that Jirka Rysavy has rejoined the Company’s Board of Directors.
Whole Foods Market, a Fortune 1000 company, owns and operates the country’s largest chain of natural foods supermarkets. The Company operates 112 stores in 22 states plus the District of Columbia with total square footage of 2.9 million square feet.
The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties, including but not limited to general business conditions, the timely development and opening of new stores, the impact of competition, and other risks detailed from time to time in the Company’s SEC reports, including the report on Form 10K for the fiscal year ended September 26, 1999. The Company does not undertake any obligation to update forward-looking statements.
The following financial information is for core retail operations only
for all periods.
Whole Foods Market Inc. And Subsidiaries
Condensed Core Retail Income Statements (Unaudited)
In thousands, except per share data
Twelve weeks ended Twelve weeks ended
July 2 July 4
2000 % 1999 %
———————————————————————-
Sales $ 442,557 100.0% 360,671 100.0%
Cost of goods sold and
occupancy costs 288,643 65.2% 237,463 65.8%
———————————————————————-
Gross profit 153,914 34.8% 123,208 34.2%
Selling, general and
administrative expenses 125,275 28.3% 100,938 28.0%
Pre-opening and
relocation costs 2,306 0.5% 809 0.2%
———————————————————————-
Income from operations 26,333 6.0% 21,461 6.0%
Interest expense, net (3,239) -0.7% (1,845) -0.5%
———————————————————————-
Income before income taxes 23,094 5.2% 19,616 5.4%
Income taxes 9,700 2.2% 7,650 2.1%
———————————————————————-
Net income before cumulative
effect of change in
accounting principle 13,394 3.0% 11,966 3.3%
Cumulative effect of change
in accounting principle,
net of income taxes — 0.0% — 0.0%
———————————————————————-
Net income $ 13,394 3.0% 11,966 3.3%
———————————————————————-
Basic earnings per share:
Income before cumulative
effect of change in
accounting principle 0.51 0.46
Cumulative effect of change
in accounting principle,
net of income taxes — —
———————————————————————-
Basic earnings per share 0.51 0.46
———————————————————————-
Weighted average
shares outstanding 26,143 26,205
———————————————————————-
Diluted earnings per share:
Income before cumulative
effect of change in
accounting principle 0.49 0.44
Cumulative effect of change
in accounting principle,
net of income taxes — —
———————————————————————-
Diluted earnings per share 0.49 0.44
———————————————————————-
Weighted average shares
outstanding, diluted basis 27,325 27,428
———————————————————————-
———————————————————————-
Selected Financial Information
EBITDA 41,480 33,366
Depreciation and amortization 15,147 11,905
Capital expenditures 36,718 37,716
———————————————————————-
Forty weeks ended Forty weeks ended
July 2 July 4
2000 % 1999 %
———————————————————————-
Sales 1,399,579 100.0% 1,134,249 100.0%
Cost of goods sold and
occupancy costs 918,487 65.6% 753,832 66.5%
———————————————————————-
Gross profit 481,092 34.4% 380,417 33.5%
Selling, general and
administrative expenses 395,839 28.3% 315,413 27.8%
Pre-opening and
relocation costs 8,339 0.6% 3,052 0.3%
———————————————————————-
Income from operations 76,914 5.5% 61,952 5.5%
Interest expense, net (9,497) -0.7% (5,066) -0.4%
———————————————————————-
Income before income taxes 67,417 4.8% 56,886 5.0%
Income taxes 28,315 2.0% 22,185 2.0%
———————————————————————-
Net income before
cumulative effect of change
in accounting principle 39,102 2.8% 34,701 3.1%
Cumulative effect of
change in accounting
principle, net of income taxes (375) -0.1% — 0.0%
———————————————————————-
Net income 38,727 2.8% 34,701 3.1%
———————————————————————-
Basic earnings per share:
Income before cumulative
effect of change in
accounting principle 1.50 1.32
Cumulative effect of change
in accounting principle,
net of income taxes (0.01) —
———————————————————————-
Basic earnings per share 1.49 1.32
———————————————————————-
Weighted average
shares outstanding 26,062 26,384
———————————————————————-
Diluted earnings per share:
Income before cumulative
effect of change in
accounting principle 1.44 1.26
Cumulative effect of change
in accounting principle,
net of income taxes (0.01) —
———————————————————————-
Diluted earnings per share 1.43 1.26
———————————————————————-
Weighted average shares
outstanding, diluted basis 27,097 27,436
———————————————————————-
———————————————————————-
Selected Financial Information
EBITDA 123,786 99,091
Depreciation and amortization 46,872 37,139
Capital expenditures 113,799 100,002
———————————————————————-
The results of operations of WholePeople.com are no longer
consolidated with Whole Foods Market financial statements effective
the beginning of the second fiscal quarter. Prior year results include
Amrion and wholefoods.com results of operations for all periods.
Whole Foods Market Inc. And Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
In thousands, except per share data
Twelve weeks ended Forty weeks ended
July 2 July 4 July 2 July 4
2000 1999 2000 1999
———————————————————————-
Sales $ 442,557 377,580 1,420,230 1,192,691
Cost of goods sold and
occupancy costs 288,643 247,134 930,764 784,795
———————————————————————-
Gross profit 153,914 130,446 489,466 407,896
Selling, general and
administrative expenses 125,275 108,124 405,974 339,913
Pre-opening and
relocation costs 2,306 809 8,485 3,052
———————————————————————-
Income from operations 26,333 21,513 75,007 64,931
Interest expense, net (3,239) (1,760) (9,550) (4,846)
———————————————————————-
Income before
income taxes 23,094 19,753 65,457 60,085
Income taxes 9,700 7,703 27,492 23,433
———————————————————————-
Net income before
cumulative effect of
change in accounting
principle 13,394 12,050 37,965 36,652
Cumulative effect of
change in accounting
principle, net of
income taxes — — (375) —
———————————————————————-
Net income $ 13,394 12,050 37,590 36,652
———————————————————————-
Basic earnings per share:
Income before cumulative
effect of change in
accounting principle 0.51 0.46 1.46 1.39
Cumulative effect of
change in accounting
principle, net of
income taxes — — (0.01) —
———————————————————————-
Basic earnings per share 0.51 0.46 1.44 1.39
———————————————————————-
Weighted average shares
outstanding 26,143 26,205 26,062 26,384
———————————————————————-
Diluted earnings per share:
Income before cumulative
effect of change in
accounting principle 0.49 0.44 1.40 1.34
Cumulative effect of change
in accounting principle,
net of income taxes — — (0.01) —
———————————————————————-
Diluted earnings per share 0.49 0.44 1.39 1.34
———————————————————————-
Weighted average shares
outstanding, diluted basis 27,325 27,428 27,097 27,436
———————————————————————-
———————————————————————-
Selected Financial Information 3rd Quarter 3rd Quarter
2000 1999
——————————-
Cash and marketable
securities — 13,527
Natural foods supermarkets
inventories 90,888 74,815
WholePeople inventories — 20,677
Total assets 774,332 610,105
Long-term debt (including
current maturities) 284,917 180,248
Shareholders’ equity 338,688 300,097
———————————————————————-
