Whole Foods 2009 Annual Report Download - page 33

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time in the Company’s history. However, in the fourth quarter of fiscal year 2009, our comparable store and identical store
sales trends improved for the second quarter in a row and, after five quarters of year-over-year declines, during the first
quarter of fiscal year 2010 through November 4, 2009, comparable store and identical store sales were up 1.6% and 0.4%,
respectively. Food cost inflation, which we began to experience at increasing levels in fiscal year 2008, began to moderate in
the fourth quarter of fiscal year 2009, likely having a negative impact on our sales, basket size and price per item.
Outlook for Fiscal Year 2010
The Company is pleased with its sales trends for the first quarter of fiscal year 2010 through November 4, 2009; however,
increased price investments could negatively impact our sales going forward, and with no anticipated positive change in the
economy over the short term, the Company believes it is reasonable to expect sales results for the fiscal year in line with or
slightly better than these quarter-to-date results. For the fiscal year, the Company expects sales growth of 5% to 8%,
comparable store sales growth of 1% to 4%, and identical store sales growth of 0% to 3%. The Company expects to open 16
new stores, 10 of which are planned to open in the first half of the fiscal year. While sales comparisons are expected to
improve in the first half of the year, the Company anticipates having greater difficulty leveraging expenses due to the cost
savings realized in fiscal year 2009. The Company expects to produce cash flows from operations in excess of its capital
expenditure requirements on an annual basis.
Results of Operations
The following table sets forth the statements of operations data of Whole Foods Market expressed as a percentage of total
sales for the fiscal years indicated:
2009 2008 2007
Sales 100.0% 100.0% 100.0%
Cost of goods sold and occupancy costs 65.7 66.0 65.2
Gross profit 34.3 34.0 34.8
Direct store expenses 26.7 26.5 26.0
General and administrative expenses 3.0 3.4 3.3
Pre-opening expenses 0.6 0.7 0.9
Relocation, store closure and lease termination costs 0.4 0.5 0.2
Operating income 3.5 3.0 4.5
Interest expense (0.5) (0.5) (0.1)
Investment and other income - 0.1 0.2
Income before income taxes 3.1 2.6 4.6
Provision for income taxes 1.3 1.2 1.8
Net income 1.8 1.4 2.8
Preferred stock dividends 0.3 - -
Income available to common shareholders 1.5% 1.4% 2.8%
Figures may not sum due to rounding.
Sales
Sales totaled approximately $8.03 billion, $7.95 billion and $6.59 billion in fiscal years 2009, 2008 and 2007, respectively,
representing increases of 1.0%, 20.7% and 17.6% over the previous fiscal years, respectively. Adjusted to reflect a 52-week
period in fiscal year 2007, sales in fiscal years 2008 and 2007 increased 23.6% and 15.3% over the prior fiscal years,
respectively. Sales for all fiscal years shown reflect increases due to new stores opened and acquired. Comparable store sales
decreased approximately 3.1% in fiscal year 2009 and increased approximately 4.9% and 7.1% in fiscal years 2008 and
2007, respectively. As of September 27, 2009, there were 274 locations in the comparable store base. The number of stores
open or acquired 52-weeks or less equaled 15, 20 and 102 at the end of fiscal years 2009, 2008 and 2007, respectively. The
sales increase contributed by stores open or acquired within 52-weeks or less totaled approximately $234.8 million, $236.1
million, and $421.8 million for fiscal years 2009, 2008 and 2007, respectively. Identical store sales decreased 4.3% in fiscal
year 2009 and increased 3.6% and 5.8% in fiscal years 2008 and 2007, respectively. Identical store sales in fiscal years 2009,
2008 and 2007 exclude from the comparable calculation twelve, seven and six store relocations, respectively, and three
remodels with major expansions during portions of each year.
Gross Profit
Gross profit totaled approximately $2.75 billion, $2.71 billion and $2.30 billion in fiscal years 2009, 2008 and 2007,
respectively. Gross profit as a percentage of sales was 34.3%, 34.0% and 34.8% in fiscal years 2009, 2008 and 2007,
respectively. Net LIFO inventory reserves were reduced by approximately $5.6 million in fiscal year 2009 due to net
deflation in product costs compared to net reserve increases of approximately $12.7 million and $6.9 million in fiscal years
2008 and 2007, respectively. During fiscal year 2009, the Company realized lower cost of goods sold as a result of better
purchasing and distribution disciplines as well as improved store-level execution, particularly in terms of shrink control and