Austin, Texas — Whole Foods Market here last week said it believes that its efforts to improve its price image are yielding some results, although same-store sales are projected to remain negative this year.
“We started pushing hard on our value programs last May, and while it hasn't been an overnight shift, we believe we are starting to change the dialogue about our prices and hopefully the perception as well,” said John Mackey, chairman and chief executive officer, in a conference call discussing financial results for the fiscal second quarter. “While this has a negative short-term impact on our comps, we believe we will be well positioned to drive further comp increases through increased basket size when the economy rebounds.”
During the call, the company said it has seen increased volume in sales of perishables, which it is promoting more aggressively than in the past. It also said private-label sales are increasing at three times the rate of branded items.
Andrew Wolf, a Richmond, Va.-based analyst with BB&T Capital Markets, said consumer price perception appears to be improving in the Center Store aisles, but the perimeter volume is being driven by promotions.
“The perimeter is where they have some riddles to solve,” he said. “Or they can wait for the economy to improve.”
Comparable-store sales for the fiscal second quarter fell 4.8%, however, marking the second quarter in a row of declining sales at the natural and organic specialist. Identical-store sales were down 5.8%.
Net income for the 12-week quarter, which ended April 12, was down 11.8%, to $35.3 million, compared with year-ago results, while sales were down slightly at $1.86 billion.
Mackey said the company was “very pleased” with the results, given that tight expense controls drove a 10% increase in income from operations, excluding impairment charges, to $82.7 million.
Wolf said investors appeared to react positively to the company's ability to contain costs in a weakening sales environment. The company's stock rose following the earnings release.
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