Whole Foods low-price makeover pays off as profit tops estimates
FEBRUARY 11, 2015 LAST UPDATED: THURSDAY, FEBRUARY 12, 2015, 7:15 AM
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Whole Foods Market Inc.’s makeover is paying off.
After cutting prices in a bid to shake its reputation for expensive groceries, the company on Wednesday posted first- quarter sales that rose 10 percent. And even while selling its wares for less, Whole Foods still managed to produce profit that topped analysts’ estimates.
“This quarter shows they can lower prices and not kill their margins,” said Brian Yarbrough, an analyst at Edward Jones & Co. in St. Louis. “They’re going to continue to see pressure there.”
Investors cheered the news, sending the shares up 3.1 percent to $55.16 at 4:39 p.m. in late trading in New York.
Whole Foods has been forced to lower prices, particularly on produce, because of increasing competition in the organic- food market from the likes of Kroger Co. and Wal-Mart Stores Inc. So far, the strategy is working. Sales at Whole Foods stores open at least 57 weeks rose 4.5 percent in the quarter through Jan. 18, up from a 3.1 percent gain in the prior period. Same-store sales in the current quarter were up 5.1 percent through Sunday, showing the momentum has continued.
Improving that “over priced image” correction was needed and I found myself returning to the store.
Good luck to them and I wish them the best.