Whole Foods Market (WFM, Financial) had announced first quarter fiscal year 2015 revenue of $4.7 billion, in line with the Thomson Reuters consensus estimate of $4.67 billion of revenue as compared to $4.24 billion of revenue during the same period last year. The company also expects sales growth in 2015 to be more than 9 percent and same-store sales growth in the low to mid-single digit percentages.
Whole Foods reported nearly 6 percent growth in quarterly net income to $167 million, or 46 cents per share and slightly exceeding the analyst’s average earnings per share expectation of 45 cents per share, according to Thomson Reuters I/B/E/S.
Better times ahead
Whole Foods declared excellent first quarter of fiscal year 2015 financial results with a significant 10% increase in net sales growth enabled by solid momentum witnessed across classes, storage, departments and key areas where the company’s planned efforts coupled with rising consumer confidence are collectively responsible for its enhanced results.
During the first quarter of 2015, Whole Foods introduced its Values Matter national brand campaign popularly broadcasted across the audio visual media and print media.
The key growth efforts of Whole Foods through increasing its visibility in the highly competitive growth markets by leveraging several advertising campaigns is expected to enhance the customer footfall at its stores.
Whole Foods has experienced a solid increase in awareness for its key customers with enhancements in both shopping intention and value insight compared to its competitors. At present, it is offering fresh grocery delivery options to several homes in America compared to any other food retailer. Whole Foods average weekly online delivery sales crossed the $1 million mark post declaration of its 15-market partnership with Instacart in September.
Whole Foods' online delivery sales is approximately 5% of net sales in some of its key stores and gives the brand confidence for its future growth potential as Whole Foods increases its reach to additional markets, offer superior content depicting its unrivalled quality standards and widen its product offerings.
The better delivery services opted by Whole Foods including door to door and online delivery services are forecasted to position Whole Foods as the top food services provider ahead of its competition.
Key strategies
Recently, Whole Foods launched a key online deal for Valentine’s Day that includes providing flower delivery in maximum one-hour with attractive pricing beginning at $25 a dozen of its premium fairly sourced whole-trade roses. Customers have an option to place orders online and in advance along with the flexibility to comprise chocolates or some other beneficial treats which becomes a deal the competitors can hardly imitate.
Whole Foods is expected to be the major Apple Pay retailer when considering both sales and transactions, further strengthening the fact that its customer base wish to benefit from the newest digital technologies. This payment alternative has gained significant traction with about 2% of sales which is estimated to expand continuously particularly after the launch of Apple Watch this year.
Whole Foods' unique capability to introduce innovative online deals and partner with the major grocers is believed to strengthen its already robust customer base and attract several new customers as well.
Whole Foods has lately introduced its new and enhanced Whole Foods Market app with already about 600,000 downloads to date. Android and iOS users are allowed to access modified and local store information, events and offers coupled with 3,700 popular recipes where customers can choose the ingredients as they wish.
During the first quarter, Whole Foods launched nine fresh stores growing into Canada, Ottawa and refreshing its brand with innovative big flagships in both Boston and Houston. Since the launch of its first taproom in 2010, it currently has more than 100 wine-bars and taprooms throughout the company.
Whole Foods is keen on remaining updated with the current technology in the market and popularize its key offerings online. This rapid inclusion of new technology in its daily workings and the introduction of new stores at an accelerated pace is forecasted to hugely benefit Whole Foods in a long-term.
Whole Foods has already launched its second brewery and expects several others to come. It revitalized 40 stores and estimates to complete the revitalization of 200 stores by the end of the year.
Whole Foods recently launched its responsibly grown rating system ahead of its competition to gauge the expanding unhealthy practices that affect human health and environment and forbid the usage of the extremely harmful pesticides.
Whole Foods currently has nearly 400 stores in the U.S. and ultimately targets on adding other significant new stores to reach a store count of 1,200.
Conclusion
Overall, investors are advised to invest in the Whole Foods Market, Inc., looking at the impressive valuation levels with the trailing P/E and forward P/E ratios of 34.30 and 27.73 respectively. The PEG ratio of 2.44 suggests slower growth. The profit margin of 4.08% is satisfactory and the company’s expansion efforts are further supported by a solid balance sheet with total cash of $743.00 million and total debt of $62.00 million only.
