Whole Foods Finally Posts Solid Fiscal Q2

Whole Foods Market, Inc. (NASDAQ: WFM) reported fiscal second-quarter financial results after the markets closed on Wednesday. The company had $0.44 in earnings per share (EPS) on a record $3.7 billion in revenue compared to consensus estimates from Thomson Reuters that called for $0.41 in EPS on $3.74 billion in revenue. The same period from last year had $0.43 in EPS on $3.65 billion in revenues.

Comparable store sales decreased 3.0% during this quarter.

In the second quarter, the company opened eight new stores, expanding into two new markets. The company recently signed nine new leases for six Whole Foods stores and three 365 stores. Whole Foods sees potential for 1,200 Whole Foods Market stores in the United States, with the new 365 format expanding the growth opportunity beyond 1,200 stores.

The company updated its guidance for the fiscal 2016 year, expecting sales growth of up to 3% reflecting comps of up to negative 2%, also EPS is expected to be up to $1.53. There are consensus estimates that are calling for $1.55 in EPS on $15.96 billion in revenue.

John Mackey, co-founder and co-CEO of Whole Foods, commented on earnings:

We produced record sales and operating cash flow, and returned $144 million of capital to our shareholders.  Through our improved cost structure and expense disciplines, we delivered strong EBITDA in a challenging sales environment. Food retailing is evolving at an incredibly fast pace, and consumers have more options than ever before.  In addition to becoming more competitive on price, we are making measurable progress in fundamentally evolving our business and providing an enhanced experience for our customers across all platforms before, during and after their visit.

The company produced $343 million in cash flow from operations during this quarter. On the books, cash, equivalents, and short-term investments totaled $848 million at the end of the second quarter compared to $392 million at the end of the previous fiscal year.

Shares of Whole Foods closed Wednesday down 0.8% at $28.51, with a consensus analyst price target of $29.86 and a 52-week trading range of $28.07 to $47.79. Following the release of the earnings report, the stock was initially up 4.6% at $29.83 in the after-hours trading session.