AUSTIN, Texas — Whole Foods Market here said last week that its annual sales have passed the $10 billion mark, and reiterated that the 316-store company sees sufficient market opportunities to achieve its long-term goal of 1,000 U.S. stores.
The company said it expects to open a record number of new stores in each of the next two fiscal years — between 24 and 27 in 2012 and between 27 and 32 in fiscal 2013 — including additional locations in Canada and the United Kingdom.
“We are not yet saturated in any major metropolitan market, and our flexibility on new-store size has opened up additional market opportunities,” said John Mackey, co-chief executive officer.
“In addition, through our experience with acquisitions and our own store development, we have learned that select secondary markets are ready and waiting for Whole Foods to come to town.”
In comments during the chain's quarterly earnings call, Co-CEO Walter Robb said the chain's experience operating the acquired Wild Oats stores “and our ability to improve sales at those stores gives us confidence to pursue smaller markets. Though sales per square feet in those markets are at or below sales in larger markets, the economic case is compelling because rents are less and the capital spend is lower.”
A.C. Gallo, president and chief operating officer, cited a 35,000-square-foot store that just opened in Oklahoma City, “which has an amazingly high volume, with phenomenal sales per square foot. Smaller markets are less competitive, and there's less differentiation in those markets so Whole Foods stands out more than in larger markets.
“Our stores perform well in so-called secondary markets, and the return on invested capital is extraordinarily high, and those will be strong growth vehicles over the next several years.”
For the 12-week fourth quarter that ended Sept. 25, net income rose 31.3% to $75.5 million, while sales increased 12.2% to $2.4 billion and comparable-store sales climbed 8.7%.
For the year, net income rose 39.4% to $342.6 million, with sales up 12.2% to $10.1 billion and comps up 8.4%.
Transaction size increased 5% during the fourth quarter, which Mackey said was due to the chain's efforts to promote value and differentiation. Basket size increased 4%, “driven entirely by a higher average price per item as we selectively passed through product cost increases and as customers traded up,” he said.
Mackey said average weekly sales per store hit $630,000 in fiscal 2011, which translates to $863 in sales per square foot.
He also said Whole Foods does well with Baby Boomers, “who continue to come our way because they are increasingly concerned with health and longevity,” and it does well with their children, the Millennials, “who agree with our values and philosophies and whose parents shopped with us.”
The company has not been as successful growing its base of Generation X shoppers, he added.