Organic is expanding
Wed, 12 Nov 1997 14:58:28 -0500 (EST)
Whole Foods sales top $1 billion
By R. Michelle Breyer
Austin American-Statesman Staff
Published: Nov. 12, 1997
Whole Foods Market celebrated its first billion-dollar year, reporting
record sales and earnings for fiscal 1997.
"This is undoubtedly the best year in the company's 17-year history," said
Whole Foods President Peter Roy. "Whole Foods has a lot of positive
Growth of its private-label brands, several successful acquisitions, rising
sales at its existing stores and increased demand and awareness of
natural foods pushed sales for the year to $1.1 billion, up 20 percent
from fiscal 1996 sales of $946.3 million.
Net income for the year rose to $26.6 million, compared to a loss of
$12.7 million in fiscal 1996, beating analysts' projections. Earnings per
share were $1.05.
Fourth-quarter sales rose from $243.9 million in fiscal 1996 to $270.5
million in fiscal 1997 -- a 10.9 percent increase. Net income for the
fourth quarter was $5.2 million, compared with a loss of $22.3 million
during the same period in 1996. Earnings per share for the quarter were
20 cents, vs. a loss of 94 cents in the prior year.
The company's financial results include the $36.4 million cost of the 1996
merger with Fresh Fields Inc. and the $4.9 million cost associated with
the Sept. 11 merger with Amrion Inc., a manufacturer and marketer of
The Austin-based chain of natural food supermarkets has grown from
one small store on North Lamar Boulevard to 76 stores in 17 states and
the District of Columbia. It is now the category killer in its niche.
"They really caught the wave of natural foods and they're riding it," said
Kim Galle, vice president of equity research with Adams, Harkness &
Whole Foods started the calendar year contending with several major
issues. Weak sales in Southern California, a management shakeup in the
Midwest and increased competition in the Northeast caused the stock to
drop to $17.50, its 52-week low.
As the fiscal year came to a close Sept. 28, stores in every region in the
country were reporting healthy same-store sales increases. Same-store
sales have increased 14.6 percent from a year ago.
Sales of the company's private-label products, including the new
lower-cost "365" line, have been credited with much of this growth.
More than 5 percent of the company's revenues come from the
private-label program and that percentage is expected to double within
"We're selling more to existing customers as well as attracting new
customers," Roy said.
The company's stock price has steadily risen, hitting a 52-week high of
$44.75 on Nov. 7. Tuesday, it closed at $43.93 3/4, up $1.31 1/4.
"I feel safe in saying our comps (same-store sales) will be over 10
percent for the entire year," Whole Foods Chairman and Chief Executive
Officer John Mackey said.
As Whole Foods enters 1998, it continues to grow. Last week the
company signed an agreement to buy Merchant of Vino, a chain of four
natural foods supermarkets and two specialty wine and gourmet food
shops in the Detroit metropolitan area. With this acquisition, Whole
Foods is the leader in its industry in each of the nation's Top 10
metropolitan markets, Roy said.
Eight new stores will be added in fiscal 1998 and 11 are slated for 1999.
Stores are planned for new markets including Atlanta, Tempe, Ariz.,
New York, Boulder, Colo. , and Seattle.
The natural foods industry is growing at 25 percent a year as baby
boomers age, said Lynne Collier, a retail analyst with Rauscher Pierce
"They're intent on looking better and feeling better," Collier said. "That
plays right into Whole Foods' market niche. Competitively speaking,
Whole Foods holds the dominant position."
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