Whole Foods Market Inc. (NASDAQ: WFM) reported on Tuesday that its fiscal second-quarter net income jumped 20% as the up-market grocery chain witnessed robust revenue growth while margin also remained healthy. The Company provided upbeat guidance on full-year and announced two-for-one stock split.
Shares climbed 8.19% to $100.40 in aftermarket trading hours as adjusted earnings edged past Street’s consensus estimate while revenue was in-line with expectation.
The Austin Texas based Company which specializes in organic and natural food products has seen its top line grow consistently in the recent past as more and more customers are turning away from traditional grocery stores. The evidence is the same-store-sales. Same-store-sales, a key gauge on retailer’s performance, rose 6.9% in the recently concluded quarter and is already up 9.4% thus far in the current quarter, the Company said.
Contrary to expectations, Whole Food’s gross margin improved a tad to 36.4% from 36.3%, in the same quarter of last year. Earlier in February the grocery retail chain had warned that discount offers and decision to hold prices steady notwithstanding jump in costs since it wanted to expand its base in smaller centers would weigh on margin. At that moment, Whole Foods said that its marketing strategy to project itself as “value for money” supermarket chain was not generating desired results. However, it eventually worked in Company’s favor as customer traffic rose sharply compared to the first quarter, the Company said.
Commenting over the results, Whole Foods Market co-Chief Executive, Walter Rodd said in earnings call, “I think this quarter is evidence that we’re finding our dance step again,” “The tough economy is still out there, and revenues are a little softer across the board, but we’ve broadened our value base, and our customer base and continue to take market share.”
For the fiscal second quarter, Whole Foods reported a profit of $142 million or 76 cents a share from $118 million or 64 cents a share, in the year-earlier quarter.
Sales during the period soared 13% to $3.03 billion from $2.67 billion, in the same quarter of last fiscal.
Analysts polled by Thomson Reuters were expecting earnings of 73 cents a share on sales of $3.03 billion.
Looking ahead at full-year, the Company upwardly revised its earnings guidance to $2.86 to $2.89 a share from $2.83 to $2.87 a share. Analysts were expecting $2.87 a share.
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