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Whole Foods Market Comps Still Positive But Lower Again

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Last updated on August 1st, 2014 at 12:15 pm

Whole Foods Market’s total sales increased 10 percent in its third quarter ended July 6 to a record $3.4 billion. For the 40 weeks year to date, total sales increased 10 percent to $10.9 billion, also a record.

Comparable-store sales increased 3.9 percent in the third quarter. The company said the increase was driven by transaction count and basket size growth. But the growth in comparable store sales is lower than the second quarter’s 4.5 percent increase and the 5 percent jump Whole Foods had predicted. Whole Foods Market’s comparable-store sales growth through July 27 is lower still, at 3.1 percent. The company’s outlook for its fourth quarter comp sales growth is 2.5 to 3.5 percent.

Co-CEO Walter Robb said the slower growth “reflects continued headwinds from our value efforts, cannibalization, competition and the economy.”

Whole Foods Market lowered its comp-store sales outlook for fiscal year 2014 to range between 4.1 to 4.4 percent vs. the 5 to 5.5 percent increase it expected in May. When the company reported first quarter results in February, it estimated comparable-store sales would increase 5.5 to 6.2 percent for the year.

Stores open less than two years reported a nearly 16 percent increase in comparable sales in the quarter, while stores eight to 11 years old reported a sales increase of less than 1 percent.

During the third quarter, Whole Foods Market recorded $204 million in capital expenditures. The company expanded into eight new markets with the opening of eight stores and the completion of its acquisition of four New Frontiers Natural Marketplace stores (one in California and three in Arizona).

Whole Foods now operates 388 stores and predicts it will cross the 500-store mark in 2017.

It will add five new markets with the signing of 11 leases. Whole Foods stores will open in Montgomery, Ala.; Bloomington, Ind.; Shrewsbury, Mass.; Cary, N.C.; Bedford, N.H.; Eugene, Ore.; Houston and Richardson, Texas; and Irvine, Los Angeles and Sacramento, Calif. Two of the new stores are relocations.

“Our business model is producing industry-leading sales per square foot, healthy returns on invested capital and strong operating cash flow,” Robb said. “We are seeing signs of stability in our sales trends and believe our strategic initiatives will help generate further momentum and produce increasing returns on invested capital over the long term.”

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