Whole Foods Revenue Rises As It Woos Cost-Conscious Shoppers
(Photographer: Patrick T. Fallon/Bloomberg)
Shares of Whole Foods climbed briefly in after-hours trading on Wednesday after the high-end grocer beat Wall Street estimates on both its top and bottom line.
In the first quarter, adjusted earnings came in at 46 cents per share, above analyst estimates of 40 cents. Sales rose 3% to a record $4.83 billion, above analyst estimates of $4.81 billion.
Yet Whole Foods, known for its expensive organic food, said same-store sales fell 1.8% during the quarter on a constant currency basis. It has been struggling to attract shoppers as giants like Kroger and Wal-Mart expand their offerings and last summer was in hot water with customers after it was found to have overcharged on certain items.
It’s also trying to shed its ”Whole Paycheck” reputation, and has been on a campaign to attract cost-conscious shoppers. The grocer has lowered prices and run more promotions, and on Wednesday said it was launching digital coupons nationally on its mobile app.
“We believe we will deliver strong returns to shareholders over the long term as we improve our price perception, better communicate our higher quality standards and differentiation, and continue to fundamentally evolve our business,” said co-CEO Walter Robb in prepared remarks.
Last year the company announced to open a chain of smaller, less expensive stores (dubbed “365″ after the grocer’s everyday value brand) that will be geared toward millennials. It expects to open three of these 365 stores this year, the first of which will open in Silver Lake, CA in late May.
Looking to this year, Whole Foods doesn’t expect same-store sales to recover. For 2016, Whole Foods is anticipating same-store sales in the range of -2% to 0%. For the first three weeks of the current quarter, ending February 7, they’ve fallen 2.8%.
Looking to this year, Whole Foods doesn’t expect same-store sales to recover. For 2016, Whole Foods is anticipating same-store sales in the range of -2% to 0%. For the first three weeks of the current quarter, ending February 7, they’ve fallen 2.8%.
Its margins have also slipped despite cost cuts and during the quarter net income fell to $157 million from $167 million a year ago.
Shares of Whole Foods climbed 5% to $30.22 in after-hours trading before slipping into negative territory as investors digested the results. They have tumbled 45% over the last 12 months.
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