Whole Foods Market Inc. appears to be adjusting to its new economic reality.
The natural and organic grocer, known for its high-end products and similarly high prices, says lower prices are bringing shoppers back in its doors, driving a surge in fourth-quarter profit.
Whole Foods said this week that shoppers bought more items in its stores, but continued pressure to compete on price and uncertain economy made some investors nervous about its outlook for the year.
Whole Foods, based in Austin, Texas, was hard hit by the recession as consumers cut spending and turned to lower-priced stores. The company made several strategic changes–cutting costs, tightening inventory, securing a major investor, increasing its store brands and promoting other lower-priced options. It also created a new system to track competitors’ prices and help it adjust its own.
Those changes, along with lower food commodity prices on some foods that improved profit margins, were a boon to the grocer.
“We believe our sales have stabilized and officially turned the corner,” Whole Foods CEO John Mackey said.
Whole Foods reported that it earned US$28.7 million, or 20 cents per share for the fourth quarter. That’s up from $1.5 million, or one cent per share, for the same quarter last year.
Revenue grew more than 2% to $1.8 billion.
The company’s sales at stores open at least a year were down 0.9% for the quarter, compared a year earlier. But after five quarters of year-over-year declines, the company has seen that key figure jump 1.6% in the first five weeks of the current quarter.
