Whole Foods Delivers Strong Earnings Again, Likely At Expense of Peers

Whole Foods Market, Inc. (NASDAQ: WFM) is seeing shares surge after earnings. The organic and luxury grocery chain reported quarterly earnings of $0.63 EPS and a 14% rise in sales to $2.7 billion.  The results were better than expected as the Thomson Reuters consensus estimates were $0.61 EPS and $2.73 billion in revenue. The grocer also managed to show 6.9% operating margins and that is very high for a grocer.  Kroger Co. (NYSE: KR) and Safeway Inc. (NYSE: SWY) would love to have those margins.

The company said that comparable store sales increased 8.2%, while identical store sales were up 8.0%.  Walter Robb, co-CEO, said, “Our accelerated growth plans are on track, and we believe we will continue to gain market share through further differentiating our shopping experience, improving our relative value positioning, and reinforcing our position as America’s healthiest grocery store.”

Whole Foods managed to end the quarter with total cash and cash equivalents of approximately $1.5 billion.  This is going to continue growing for the time being. The company lifted its earnings per share outlook for 2012 to $2.51 to $2.52 per share, which is an increase of 30% to 31% year over year.

Here is the guidance for 2013: comparable store sales growth of 6.5% to 8.5% and diluted earnings per share growth of 16% to 17% to $2.83 to $2.87 per share.

Shares are trading up by almost 8% at $91.20 after the report and the 52-week trading range is $53.32 to $97.25.  Thomson Reuters had a consensus analyst price target of $99.11 before this news.

Investors are looking for a secondary trade in The Fresh Market, Inc. (NASDAQ: TFM) as its shares are trading up 4% at $54.00 after the Whole Foods earnings report.

JON C. OGG