In spite of the sluggish U.S. economy, more people are continuing to spend money to eat healthier. Earnings announced by Whole Foods Market (WFM) supports that.
The Austin, Texas-based retailer beat analysts' forecasts and reported June 25 that net income in its third quarter ended July 1 rose to 63 cents a share, or $116.8 million, a 32% increase from the prior year. Sales for the quarter increased 14% to $2.7 billion. The company's stock is up 11.3% in after-hours trading to about $94 a share.
"In an economic environment that is proving to be difficult for many retailers, we are thriving and pleased to report another quarter of strong growth and excellent results for our stakeholders," said Walter Robb, co-chief executive officer of Whole Foods Market. "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."
And the good performance isn't limited to just the most recent quarter. According to Bloomberg News, Whole Foods, which is accelerating store openings in the U.S. Midwest to help boost sales, has posted revenue growth of at least 11 percent for the past 10 quarters.
Whole Foods isn't the only supermarket recognizing and benefiting from the growing interest among U.S. citizens in eating healthier. The Fresh Market (TFM), a specialty retailer based in Great Neck, N.Y. that sells fresh, high-quality food products, has about 113 stores in 21 states and had strong sales and earnings growth for its first quarter ended April 29. Privately held supermarkets, also are adding more organic products. Wegmans, for one, has added hundreds of them. It operates its own organic farm on Canandaigua Lake in upstate New York, partners with local growers, teamed up with an organic farm in southeastern Pennsylvania to share growing practices, and works with a farm that provides Wegmans Organic Milk.
In an earlier blog I wrote, "What's To Eat?" I noted that people are getting sick and tired of not knowing what they're eating. Their desire to eat well will undoubtedly continue and smart retailers, food producers and product manufacturers will find more ways to cash in on that trend. Sales growth could start to taper off, at least for awhile, if food prices go up as expected from the drought this summer. Also, businesses involved in organic food sales need to work hard to ensure the authenticity of the organic products they sell. Controversies continue to crop up about varying standards for what qualifies as "organic." The food-related businesses that provide the most transparency and research on their organic claims will come out ahead in the long run and not end up being classified as simple opportunists using the term "organic" to pump up sales.