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Whole Foods Market Reports on Q1 of FY 2017

  

Feb 17, 2017

    

In a press release dated February 8th after the market closed, Whole Foods Market (WFM) announced results for the 1st Quarter of Fiscal 2017 ending January 15th.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

   
  

 

 Quarter Ending  

Jan. 15 2017

Jan. 17 2016

Difference (%)

Sales:

$4,918,000

$4,829,000

+1.8

Gross profit:

$1,650,000

$1,641,000

+0.6

Operating income:             

$171,000

$252,000

-32.1

Net Income

           $96,000

$157,000

 

-38.9

Diluted earnings per share:

$0.30

$0.46

-37.2

Gross Margin (%)

33.5

34.0

-1.5

Operating Margin (%)

3.5

5.2

-32.7

Profit Margin (%)

2.0

3.3

-39.4

Long-term Debt, leases and other components:

$1,790,000

  $1,776,000

           +0.8

12 Months Trailing:

 

 

 

           Return on Assets    (%)

9.0

 

 

           Return on Equity    (%)

14.5

 

 

           Operating Margin   (%)

5.5

 

 

           Profit Margin          (%)

3.2

 

 

Total Assets

$6,382,000

  $6,341,000

+0.8

Market Capitalization

$9,350,000

 

          

 

52-Week Range in Share Price:          $27.67   to    $ 35.58

Market Close Feb. 8th $29.30.

Post release, after-hours trading at 18H00, $28.55 (down 2.6 percent)

Forward P/E: 20.1

 

During Q1 WFM recorded a 2.4 percent decline in comparative same store sales, a 3.9 percent drop in transactions but a 1.5 percent increase in “basket size”


During Q1 13 stores were opened bringing the total to 469.

 

 

 

In commenting on results, John Mackey, co-founder and CEO of Whole Foods Market.

Stated “In this increasingly competitive marketplace, we are committed to taking every step necessary to improve comps and deliver higher returns for our shareholders,” He added “to this end, we are refining our growth strategy, refocusing our efforts on best serving our core customers, and moving faster to fully implement category management.

 

 

Always an exponent of business gobbledygook  Mackey continued “evolving our purchasing operating model while developing data-rich, customer-centric category management capabilities is critical to our go-forward merchandising, pricing, marketing and affinity strategies."

 

Forward guidance for FY 2017 was lowered and included a diluted EPS of $1.33 (previously $1.45), growth in sales of 1.5 percent and comparative store sales of -2.4 or better. The Company intends to open 30 new stores including six locations and three “365”- format units.

 

According to observers such as Jason Rothman commenting on CNBC on Wednesday evening, the Company is encountering problems in evolving from its roots as a pioneering grocer offering “natural and healthy” products with high margins sold to an affluent clientele in urban locations and university towns. The reality is that WFM is encountering competition from clones and also from both low and high-end supermarket chains. The good-old-days will not return.  

 

Mackey, with or without Robb, appears to be searching for a concept which will restore profitability with expanded sales. Ivan Feinseth does not believe that the “365” concept will reverse the downward trend as it will dilute the Whole Foods brand. In any event if “365” is the future why is the Company only planning on three stores under this banner in 2017?