Whole Foods Market (WFM) Tops Q4 EPS by 3c, Targets FY15 Comps in Low to Middle Single Digits

Whole Foods Market (NASDAQ: WFM) reported Q4 EPS of $0.35, $0.03 better than the analyst estimate of $0.32. Revenue for the quarter came in at $3.3 billion versus the consensus estimate of $3.26 billion. Comps rose 3.1%

Fiscal Year 2015 Targets

With the beginning of the new fiscal year, the Company is taking the opportunity to shift its conversations with the investment community. Consistent with its stakeholder philosophy, the Company is focusing on a broader directional point of view and metrics it believes are key to the long-term health of the Company. In addition, the Company is not planning to provide regular quarterly updates to its annual targets, which for fiscal year 2015 are:

• Sales growth over 9%
• Comparable store sales growth in the low to middle single digits
• Square footage growth of 9% to 10% based on 38 to 42 new stores, including five to six relocations
• EBITDA margin of approximately 9%
• ROIC greater than 14%

The Company expects to continue its value strategy and to make additional investments in areas such as technology, marketing, and new and existing stores. The Company believes this is the right strategy to drive sales growth over the longer term. Reflecting its ongoing value efforts, the Company expects a greater decline in gross margin, excluding LIFO, in fiscal year 2015 than in fiscal year 2014. The Company expects to maintain expense discipline and improve its cost structure, with the biggest savings coming from internal distribution, coordinated purchasing and labor leverage. For fiscal year 2015, the Company expects annual diluted earnings per share growth in line with or slightly higher than sales growth.

The Company expects store openings to be spread fairly evenly throughout the year, with the seven former Dominick's locations re-opening as Whole Foods Market stores in the last three quarters of the year. The Company notes that average weekly sales and gross profit as a percentage of sales are typically highest in the second and third fiscal quarters, and lowest in the fourth fiscal quarter due to seasonally slower sales during the summer months. Gross profit as a percentage of sales is also lower in the first fiscal quarter due to the product mix of holiday sales. The Company also notes that Easter will fall in the second quarter of fiscal year 2015 versus the third quarter of fiscal year 2014, positively impacting comparable store sales growth in the second quarter and negatively impacting comparable store sales growth in the third quarter by an estimated 50 to 60 basis points.

For earnings history and earnings-related data on Whole Foods Market (WFM) click here.

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