US natural and organic food retailer Whole Foods Market has posted a 38% increase in second-quarter net income and raised its 2004 earnings guidance.

The company reported net income of US$35.3m, or 54 cents per share, for the second quarter to 11 April, compared to $25.6m, or 41 cents per share, in the same quarter of the previous year.

Sales for the second quarter increased 24% to $902m from $725m in the prior year. Comparable store sales growth was 17.1%, while identical store sales (excluding one relocated store and one major store expansion) increased 17.0% for the quarter.

The company said its comparable store sales growth was boosted by a below-average 7.0% comparable store sales increase in the prior year and a positive impact from the strike in Southern California. Excluding the stores positively impacted by the strike, comparable store sales increased 16.4% for the quarter.

Whole Foods CEO John Mackey said the company had managed to hold on to many customers it had attracted during the strike at several major supermarket chains in Southern California.

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“We estimate that we have retained approximately 30% of the sales we gained and maintained during the strike,” Mackey said.

After producing higher-than-expected sales and earnings in the first quarter, the company raised its fiscal year 2004 diluted earnings per share guidance to $1.93 to $2.02 from $1.88 to $1.96. Based on the higher-than-expected second quarter sales and earnings, the company is again raising its fiscal year 2004 diluted earnings per share guidance to $2.03 to $2.10.