Whole Foods said its second-quarter profit nearly doubled from a year ago, exceeding expectations, as consumers traded up to more expensive items.
The upscale natural and organic grocer also said it promoted Walter Robb to share the chief executive role with co-founder John Mackey, effectively immediately. Robb, who will also join the company’s board of directors, has served as co-president and chief operating officer with A.C. Gallo since October 2004.
Robb and Gallo will continue to share oversight of the company’s 12 operating regions as well as purchasing, distribution, marketing and quality standards.
The company on Wednesday reported same-store sales rose 8.7 percent in the fiscal second-quarter and were up 9.5 percent for the current quarter to date.
“Customers are still seeking value, as demonstrated by continued strong sales growth in promotional and private-label items,” Mackey said on a conference call.
“However, branded product sales growth has now outpaced private-label growth for the last two quarters, and we are seeing some indications of customers starting to selectively trade up to higher-priced items,” he added.
Executives said they did not see price inflation being a factor for at least the balance of the fiscal year, with the exception of vegetables and meat.
“The one area that we’ve seen things turn around in is the meat area. Beef prices especially are high right now,” Gallo said. “Some of the buying opportunities we saw over the last two years in the beef category are starting to shift on us.”
Whole Foods said its profit nearly doubled to $67.5 million, or 39 cents a share, in the fiscal second quarter ended April 11, from $35.3 million, or 19 cents a share, a year ago.
Analysts had expected a profit of 33 cents a share in the latest quarter, according to Thomson Reuters. Whole Foods boosted its full-year target for same-stores sales growth to 6 percent to 7 percent from 3.5 per cent to 5.5 percent and its earnings forecast to $1.33 to $1.37 per share from $1.20 to $1.25 per share.
By contrast, traditional grocers Safeway Inc, Kroger Co. and Supervalu Inc. have issued profit forecasts for the year that have disappointed Wall Street.