29.07.04

29.7.2004: Meldung: Whole Foods Market 3rd Quarter Results

Whole Foods Market today reported sales and earnings for the third quarter ended July 4, 2004. Sales for the 12-week quarter increased 22% to $917 million from $749 million in the prior year. This increase was driven by 9% weighted average year-over-year square footage growth and comparable store sales growth of 14.1%. Sales in identical stores (excluding two relocated stores and two major store expansions) increased 13.7% for the quarter.

Net income for the quarter increased 15% to $32.9 million from $28.7 million in the prior year, and diluted earnings per share increased 10% to $0.50 from $0.45 in the prior year. Excluding the pre-tax gain of approximately $3 million, or approximately $0.03 in diluted earnings per share, related to the distribution of proceeds from the sale of Blooming Prairie Cooperative in the prior year, net income for the quarter increased 22% and diluted earnings per share increased 17%.

Net operating profit after taxes (NOPAT) increased 12% to $34.0 million for the quarter. The Company""s capital charge for the quarter was $31.1 million, resulting in Economic Value Added (EVA) of $2.9 million.

Store Returns for the Quarter: # of Average Average NOPAT Comp Size Comps ROIC Stores Stores over eight years old 28,100 12.0% 59% 64 Stores between five and eight years old 31,700 11.7% 43% 26 Stores between two and five years old 36,500 14.6% 23% 36 Stores less than two years old (including relocations) 36,000 25.9% 13% 17 All stores in comparable store base 31,800 14.1% 34% 143 All stores open at the end of the third quarter 31,300 29% 160

"We are experiencing one of the best years in our company""s history with sales increasing 23% to $2.9 billion, net income increasing 34% to $107 million, which is more than we earned in all of last fiscal year, and EVA improving over $10 million," said John Mackey, Whole Foods Market CEO, President, Chairman and Co-founder. "Our comparable stores are producing record sales increases of 15.2% year to date, and our new stores continue to open above our expectations producing $595,000 in average weekly sales. We believe our strong results are due in part to the growing equity of the Whole Foods Market brand and demonstrate the tremendous growth opportunities that lie ahead for our company."

In the third quarter, gross profit increased two basis points to 34.6% of sales, and direct store expenses increased 35 basis points to 25.3% of sales, resulting in a 33 basis point decrease in store contribution to 9.3% of sales. For the 143 stores in the comparable store base, gross profit improved 41 basis points to 34.9% of sales, and direct store expenses increased 10 basis points to 25.0% of sales, resulting in a 32 basis point increase in store contribution to 9.8% of sales. General and administrative (G&A) expenses decreased 19 basis points to 3.0% of sales.

In the third quarter, the Company opened five new stores in Charleston, SC; White Plains, NY; Fort Collins, CO; Bellevue, WA and Glendale, CA (a relocation), ending the quarter with 160 stores totaling approximately five million square feet. Capital expenditures in the quarter were $62 million of which $37 million was for new store development. The Company produced cash flow from operations of $57 million during the quarter.

Cash and cash equivalents, including restricted cash, totaled approximately $213 million at the end of the third quarter, and long-term debt, which includes $157 million in Zero Coupon Convertible Debentures, was approximately $168 million. On July 19, 2004, the Company paid approximately $9 million to shareholders in its third quarterly dividend of $0.15 per share.

Stores in Development

The Company is pleased to announce the recent signing of eight new store leases in Redmond, WA; New York, NY; Henderson, NV; Charlotte, NC; Cranston, RI; Woburn, MA; Manhattan Beach, CA; and Austin, TX (a relocation). The following table provides additional information about the Company""s store development pipeline.

7/28/04 7/30/03 % Change Number 49 29 69% Average size (gross square feet) 47,800 44,800 7% As a percentage of existing store average size 153% 145% --- Total square footage under development 2,351,000 1,335,000 76% As a percentage of existing square footage 47% 30% --- Historical Performance

Following are certain historical results as a percentage of sales for all stores for the last four fiscal years, the four-year average through fiscal year 2003, and year to date for the current fiscal year. This information is included in order to emphasize the general consistency of the Company""s results as a percentage of sales over this period of time. Total sales growth, percent of sales from comparable stores, one-year comparable store sales increases and the sum of two years of comparable store sales increases (two-year comps) are also included.

4-Year 2004 2000 2001 2002 2003 Average YTD Gross profit 34.5% 34.8% 34.7% 34.3% 34.5% 34.8% Direct store expenses 25.0% 25.3% 25.1% 25.2% 25.2% 25.3% Store contribution 9.4% 9.5% 9.6% 9.2% 9.4% 9.5% G&A (excl. goodwill amort.) 3.3% 3.6% 3.6% 3.2% 3.4% 3.1% Sales growth 23.2% 23.6% 18.4% 17.0% 20.5% 22.5% % of sales from comp stores 86.3% 89.0% 90.1% 91.8% 89.7% 91.3% Comps 8.6% 9.2% 10.0% 8.6% 9.1% 15.2% Two-year comps 16.3% 17.8% 19.2% 18.6% 18.0% 23.7% Goals for Fiscal Year 2004

The Company expects comparable store sales growth for the fourth quarter to be in the range of 11% to 13%. This guidance range reflects the above average comparable store sales growth the Company has been experiencing this year while taking into account the tougher year-over-year comparison in the fourth quarter. The Company expects to open four new stores in the fourth quarter. Based on the Company""s strong year-to-date results, sales growth for the fiscal year is expected to be at the high end of the Company""s previously stated 18% to 22% range of guidance. The Company expects operating margin improvement in fiscal year 2004 primarily due to an increase in gross margin, along with slight improvements in G&A and pre-opening and relocation expenses as a percentage of sales. The Company expects diluted earnings per share for the fiscal year to be at the higher end of its previously stated $2.03 to $2.10 range of guidance.

Goals for Fiscal Year 2005

For fiscal year 2005, the Company expects total sales and earnings growth in line with its stated long-term goal of 15% to 20%. The Company expects weighted average square footage growth of approximately 15%. The Company faces difficult comparisons with regard to sales growth, comparable store sales increases, and diluted earnings per share growth due to the Company""s above-average results so far in fiscal year 2004. Additionally, diluted earnings per share growth could be lower than sales growth due to an expected acceleration in square footage growth which would result in higher pre-opening expense and could have some negative impact on store contribution, as new stores generally have lower gross margins and higher direct store expenses than more mature stores.

Supplemental Information: The following pie chart depicts net income and certain expense categories, including salaries and benefits, as a percentage of sales for the twelve weeks ended July 4, 2004.

http://www.wholefoodsmarket.com/investor/Q304chart.html About Whole Foods Market:

Founded in 1980 in Austin, Texas, Whole Foods Market(R) (http://www.wholefoodsmarket.com/ ) is the largest natural and organic foods retailer. The Company had sales of $3.1 billion in fiscal year 2003 and currently has 160 stores in the United States, Canada and the United Kingdom.

The following constitutes a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties, which could cause our actual results to differ materially from those described in the forward looking statements. These risks include but are not limited to general business conditions, the timely development and opening of new stores, the integration of acquired stores, the impact of competition, and other risks detailed from time to time in the Company""s SEC reports, including the report on Form 10K for the fiscal year ended September 28, 2003. The Company does not undertake any obligation to update forward-looking statements.

Contact: Cindy McCann VP of Investor Relations 512.477.4455

Whole Foods Market, Inc. Condensed Consolidated Income Statements (unaudited) (In thousands, except per share amounts) Twelve weeks ended Forty weeks ended July 4, July 6, July 4, July 6, 2004 2003 2004 2003 Sales $917,355 $ 749,043 $2,937,644 $2,397,942 Cost of goods sold and occupancy costs 600,404 490,424 1,915,646 1,574,804 Gross profit 316,951 258,619 1,021,998 823,138 Direct store expenses 232,122 186,918 743,487 601,358 Store contribution 84,829 71,701 278,511 221,780 General and administrative expenses 27,551 23,930 92,203 78,395 Pre-opening and relocation costs 2,928 2,369 7,260 8,156 Operating income 54,350 45,402 179,048 135,229 Other income (expense): Interest expense (1,319) (1,907) (5,656) (6,493) Investment and other income 1,782 4,292 4,749 4,389 Income before income taxes 54,813 47,787 178,141 133,125 Provision for income taxes 21,924 19,115 71,256 53,250 Net income $ 32,889 $ 28,672 $ 106,885 $ 79,875 Basic earnings per share $ 0.53 $ 0.48 $ 1.75 $ 1.36 Weighted average shares outstanding 61,951 59,752 61,019 58,749 Diluted earnings per share $ 0.50 $ 0.45 $ 1.64 $ 1.28 Weighted average shares outstanding, diluted basis 68,446 65,811 67,461 65,180 Dividends per share $ 0.15 $ --- $ 0.45 $ ---

A reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations follows (in thousands):

Twelve weeks ended Forty weeks ended July 4, July 6, July 4, July 6, 2004 2003 2004 2003 Net income (numerator for basic earnings per share) $ 32,889 $ 28,672 $106,885 $ 79,875 Interest on 5% zero coupon convertible subordinated debentures, net of income taxes 1,092 1,042 3,598 3,429 Adjusted net income (numerator for diluted earnings per share) $ 33,981 $ 29,714 $110,483 $ 83,304 Weighted average common shares outstanding (denominator for basic earnings per share) 61,951 59,752 61,019 58,749 Potential common shares outstanding: Assumed conversion of 5% zero coupon convertible subordinated debentures 3,280 3,285 3,281 3,285 Assumed exercise of stock options 3,215 2,774 3,161 3,146 Weighted average common shares outstanding and potential additional common shares outstanding (denominator for diluted earnings per share) 68,446 65,811 67,461 65,180 Basic earnings per share $ 0.53 $ 0.48 $ 1.75 $ 1.36 Diluted earnings per share $ 0.50 $ 0.45 $ 1.64 $ 1.28 Whole Foods Market, Inc. Condensed Consolidated Balance Sheets July 4, 2004 (unaudited) and September 28, 2003 (In thousands) Assets 2004 2003 Current assets: Cash and cash equivalents $ 195,324 $ 165,779 Restricted cash 17,939 --- Trade accounts receivable 55,349 45,947 Merchandise inventories 153,793 123,904 Prepaid expenses and other current assets 32,498 28,054 Total current assets 454,903 363,684 Property and equipment, net of accumulated depreciation and amortization 846,923 718,240 Long-term investments --- 2,206 Goodwill 112,072 80,548 Intangible assets, net of accumulated amortization 25,423 26,569 Other assets 19,495 5,573 Total assets $1,458,816 $1,196,820 Liabilities and Shareholders"" Equity 2004 2003 Current liabilities: Current installments of long-term debt and capital lease obligations $ 5,990 $ 5,806 Trade accounts payable 95,953 72,715 Accrued payroll, bonus and employee benefits 97,283 70,875 Dividends payable 9,345 --- Other accrued expenses 108,672 90,188 Total current liabilities 317,243 239,584 Long-term debt and capital lease obligations, less current installments 163,088 162,909 Other long-term liabilities 18,871 18,151 Total liabilities 499,202 420,644 Shareholders"" equity: Common stock, no par value, 150,000 shares authorized, 62,762 and 60,299 shares issued, 62,263 and 60,070 shares outstanding in 2004 and 2003, respectively 527,825 423,297 Accumulated other comprehensive income 1,307 1,624 Retained earnings 430,482 351,255 Total shareholders"" equity 959,614 776,176 Commitments and contingencies Total liabilities and shareholders"" equity $1,458,816 $1,196,820 Whole Foods Market, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (In thousands) Forty weeks ended July 4, July 6, 2004 2003 Cash flows from operating activities: Net income $106,885 $ 79,875 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 83,856 74,318 Loss on disposal of fixed assets 1,444 452 Rent differential 407 785 Change in LIFO reserve 2,500 1,840 Interest accretion on long-term debt 5,775 5,632 Tax benefit related to exercise of employee stock options 32,527 24,015 Impairment loss on long-term investments 479 1,412 Issuance of common stock to 401(k) plan 6 3,122 Cooperative patronage dividends received --- 3,210 Net change in current assets (41,329) (38,496) Net change in current liabilities 61,907 48,437 Net cash provided by operating activities 254,457 204,602 Cash flows from investing activities: Development costs of new store locations (117,718) (64,535) Other property, plant and equipment expenditures (83,385) (64,346) Acquisition of intangible assets (584) (6,552) Payments for purchase of acquired entities, net of cash acquired (20,542) --- Increase in restricted cash (17,939) --- Increase in notes receivable (13,500) --- Proceeds from sale of property, plant and equipment --- 2,709 Proceeds from conversion of long-term investments --- 1,000 Proceeds from the sale of long-term investments 1,815 --- Net cash used in investing activities (251,853) (131,724) Cash flows from financing activities: Payments on long-term debt and capital lease obligations (10,086) (6,341) Issuance of common stock 55,340 48,295 Dividends paid (18,313) --- Net cash provided by financing activities 26,941 41,954 Cash flows from discontinued operations: Net cash provided by discontinued operations --- 3,557 Net increase in cash and cash equivalents 29,545 118,389 Cash and cash equivalents at beginning of period 165,779 12,646 Cash and cash equivalents at end of period $195,324 $131,035 Supplemental disclosures of cash flow information: Interest paid $ 1,472 $ 1,939 Federal and state income taxes paid $ 48,569 $ 8,136

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides information regarding adjusted net income, adjusted diluted earnings per share and EVA in the press release as additional information about its operating results. These measures are not in accordance with, or an alternative to, GAAP. The Company""s management believes that these presentations provide useful information to management, analysts and investors regarding certain additional financial and business trends relating to the Company""s results of operations and financial condition. In addition, management uses these measures for reviewing the financial results of the Company and for incentive compensation and capital planning purposes. The following tables reflect reconciliations of GAAP information to non-GAAP financial measures:

Twelve weeks ended Forty weeks ended July 4, July 6, July 4, July 6, 2004 2003 2004 2003 GAAP Net income $32,889 $28,672 $106,885 $79,875 Blooming Prairie gain --- (3,020) --- (3,020) Income taxes (40%) --- 1,208 --- 1,208 Adjusted net income 32,889 26,860 106,885 78,063 Interest on convertible debenture, net 1,092 1,042 3,598 3,429 Adjusted net income, diluted $33,981 $27,902 $110,483 $81,492 Adjusted diluted earnings per share $ 0.50 $ 0.42 $ 1.64 $ 1.25 Weighted average shares outstanding, diluted 68,446 65,811 67,461 65,180 Twelve weeks ended Forty weeks ended July 4, July 6, July 4, July 6, 2004 2003 2004 2003 GAAP Net income $ 32,889 $ 28,672 $106,885 $ 79,875 Provision for income taxes 21,924 19,115 71,256 53,250 Interest expense and other 1,798 2,767 8,787 8,475 NOPBT 56,611 50,554 186,928 141,600 Taxes (40%) (22,644) (20,222) (74,771) (56,640) NOPAT 33,967 30,332 112,157 84,960 Capital charge (31,116) (25,927) (97,929) (81,337) EVA $ 2,851 $ 4,405 $ 14,228 $ 3,623 The following tables reflect the pro forma effects of recognizing compensation cost for stock options for the twelve weeks ended: Net income July 4, % July 6, % % 2004 Sales 2003 Sales Change Net income $ 32,889 3.6% $ 28,672 3.8% 14.7% After-tax pro forma expense (6,135) 0.7% (4,852) 0.6% 26.4% Pro forma net income $ 26,754 2.9% $ 23,820 3.2% 12.3% Dilution 18.7% 16.9% Earnings per share July 4, July 6, % 2004 2003 Change Diluted EPS $ 0.50 $ 0.45 10.0% After-tax pro forma expense (0.08) (0.07) 23.3% Pro forma diluted EPS $ 0.41 $ 0.38 7.6% Dilution 16.6% 14.8%

Whole Foods Market, Inc.
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