Whole Foods Surpasses Estimates - Analyst Blog

Whole Foods Market, Inc. (WFMI) reported its fourth quarter 2010 earnings of 33 cents per share surpassing Zacks Consensus Estimates of 28 cents per share. The earnings also jumped 13 cents from the prior-year quarter of 20 cents per share.

The fiscal year 2010 earnings of $1.43 per share beat the Zacks Consensus of $1.38 per share.

Whole Foods recorded an increase of 15.0% in its revenues from the prior year quarter to $2097.3 million which also beat the Zacks Consensus of $2069.0 million. The increase is attributed to the relative pricing and various initiatives that were taken in the areas of healthy eating, animal welfare and sustainable seafood. These initiatives were in line with the core customer base and helped to strengthen the company as a retailer of natural and organic foods.

Comparable store sale increased 8.7% and identical store sales increased 6.4% year on year basis. Whole Foods added one store during the quarter.

Gross profit increased 16.0% from the previous year quarter to $726.4 million. Gross margin increased marginally from 34.2% in the year ago quarter to 34.6%.

Operating income increased 46.7% to $100.9 million. Operating margins increased one percentage points to 4.8%.

EBITA of the company increased 26% from the comparable previous year to $165.4 million.

The company expects the sales growth to be in the range of 10% to 12% for fiscal year 2011. The company has also raised its operating margin guidance for the forthcoming fiscal year to 5.0%. Whole Foods has also raised its earnings estimate for fiscal year 2011 by 7 cents projecting it to be in the range of $1.66 to $1.71 per share beating the Zacks Estimate of $1.61 per share. The company also expects to open three new stores in the forthcoming quarter of which two stores have already been opened.

Estimates for the quarter had been trending up in the run-up to the earnings release, with three analysts raising estimates in the last 30 days and none reducing estimates. The full-year estimate for next year has been trending up in recent days, with one positive revision in the last thirty days. The Zacks Consensus Estimate for 2011 is $1.61 per share.

We currently have a Zacks # 3 rank for Whole Foods Market which translates in to a Hold rating in the short term.