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Whole Foods Market Q1 Earnings Call Transcript
Author: 123jump.com Staff
123jump.com
Last Update: 10:59 AM ET February 22 2010


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We also have some of our -- we know that a large majority of our customers only spend a certain amount of their basket at our stores. So with our improved value offerings this year we think we have gotten even our regular customers to buy more than what they had before. And then, the other thing I think that is happening especially in the -- since the beginning of the year, we started this new healthy eating initiative and we have had really a lot of positive response to our -- from our customers and team members on this. And we are seeing a lot of excitement.

We credit some of our -- of our strong produce comps to the fact that people are really focusing in on our produce. We put these ANDI scores up in the stores and we have noticed a dramatic increase in the amount of green vegetables that we are selling. Customers are really reacting to it. It is just a lot -- a combination of a lot of things and a lot of different customers.

Walter Robb

I want to add. This is Walter. I want to add something. Some of you have asked over time about a more definable metric. We have engaged Nielsen and we have got to get a, what we are calling, a positivity metric, positive sentiment drivers for Whole Foods value and this is attracting from October to the end of January. And we saw almost a 10% lift in peoples perception on that sentiment driver as well as a similar decline in the negative.

So I think the perception has shifted in terms of because of the work that we have done, we have done good work on increasing the value offerings and I think we are getting some credit for that. People are beginning to look at us differently and as we make this shift toward healthy eating, which I think John mentioned we can do, I think uniquely well among food retailers, we are getting a differentiation from that effort as well.

John P. Mackey

Hey, Neil, John here. Let me just add that over the past three weeks I have toured three of our regions, our northern California region, our southern California region and our southwest region and what I found in common in all three regions, talked to customers, I have talked to team members, I talked to suppliers while I was in the stores. And there’s some excitement level right now in our team member base and with our customers that I haven’t seen in many years.

I am not sure exactly -- maybe that sources back to our healthy eating initiative. But it is noticeable the company is gaining a lot of positive momentum right now and I am seeing it even in places you don’t expect to see it like our suppliers are generally excited because they’re seeing their sales go up. But having been in three different regions and seeing the same kind of positive energy, it has got us all pretty excited. So I know that is sort of intangible and subjective, but it is -- it is definitely happening. We don’t exactly know why? We are just speculating, but we are hopeful we will see it continue.

Neil Currie - UBS

That’s interesting color. Thanks. The other thing you alluded to and Meredith’s question, that the big turn around seems to be in the stores between two and five years old which tend to be some of your biggest stores with some of the biggest service areas. That would imply to me that maybe perhaps there has been a more exaggerated improvement in some of these service counter areas and food to go, hot food. Should I read that into it?

John P. Mackey

No. I wouldn’t read that into that. We are opening smaller stores. So we do have quite a few 50,000 plus stores that are perhaps not producing the same level of profitability mostly due to their high depreciation in cash flow production is pretty strong that our smaller stores have produced. So they’re acting a bit of a drag, but as they comp and as they grow, they’re acting as less of a drag. So one of the things we are hopeful about and perhaps even optimistic about, is that as our comps continue to hopefully accelerate the bigger stores that due to the recession didn’t comp at historical levels that we used to see are going to begin to return to historical type of comps.

And as that happens, that is going to have a strong impact, positive impact we think on the bottom line. I want to emphasize that our comp improvement has been across the board. It has been at all age stores and all sizes of stores. So, I think that’s something to support for people to understand.

Walter Robb

With that being said, I think historically we do see a larger comp gain in this category as the stores are younger, they have more comp to go. So some of that, potentially could help this category just because, there’s more comp to get earlier in the store life. But the main thing is the comps are strong across the board. Yes.

Neil Currie - UBS

Well. Thank you very much for taking my questions.

John P. Mackey

You’re welcome.

Operator




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