Whole Foods 2007 Annual Report Download - page 17

11
Growth Strategy
Whole Foods Market’s growth strategy is to expand through a combination of new store openings and acquisitions of
existing stores. We have a disciplined, opportunistic real estate strategy, opening stores in existing trade areas as well as new
markets, including international markets. Our new stores typically range in size between 45,000 and 60,000 square feet and
are located on premium real estate sites. We have also grown through acquisitions, with approximately 32% of our existing
square footage coming from acquisitions. Because the natural and organic foods retailing industry is highly fragmented and
comprised of many smaller local and regional chains, we may continue to pursue acquisitions of smaller chains that provide
access to desirable markets, locations and experienced team members. Going forward, however, such acquisitions are not
expected to impact our future store growth or financial results due to the size of the Company’s existing store base.
We have an ongoing relocation strategy and actively relocate some of our smaller stores to larger locations with improved
visibility and parking each year. For stores relocated in fiscal years 2003 through 2007, the overall average increase in size
was approximately 121%. Our historical store growth is summarized below:
2007 2006 2005 2004 2003
Stores at beginning of fiscal year 186 175 163 145 135
Stores opened 21 13 15 12 12
Acquired stores 109 1 - 7 -
Divested stores (35) - - - -
Relocations and closures (5) (3) (3) (1) (2)
Stores at end of fiscal year 276 186 175 163 145
Total gross square footage at end of fiscal year 9,312,000 6,377,000 5,819,000 5,145,000 4,545,000
The following table provides additional information about the Company’s store locations by region as of September 30,
2007:
Stores at Stores Stores at
Beginning of Stores Stores Stores Relocated/ End of
Fiscal Year Opened Acquired Divested Closed Fiscal Year
Florida 8 1 5 - - 14
Mid-Atlantic 28 2 6 - - 36
Midwest 21 4 6 - - 31
North Atlantic 27 2 5 - (2) 32
Northeast 13 2 1 - - 16
Northern California 20 4 1 - (1) 24
Pacific Northwest 5 2 11 - - 18
Rocky Mountain 10 - 23 - - 33
South 14 1 3 - - 18
Southern Pacific 24 2 38 (27) (1) 36
Southwest 16 1 10 (8) (1) 18
Total 186 21 109 (35) (5) 276
As of November 20, 2007, we had signed leases for 87 stores scheduled to open through fiscal year 2010 totaling
approximately 4.5 million square feet, or approximately 48% of our existing square footage. These stores, which average
approximately 51,000 square feet in size and are roughly 48% larger than the average size of our existing store base, include
22 relocations and 14 new markets. Our historical growth in stores in development is summarized below:
November November November November November
20, 2007 2, 2006 9, 2005 10, 2004 30, 2003
Stores in development 87 88 65 53 35
Average size – gross square feet 51,000 56,000 55,000 49,000 45,000
Total gross square footage in development 4,485,000 5,003,000 3,626,000 2,594,000 1,607,000
As a percentage of existing square footage 48% 77% 60% 50% 35%
We have continued to sign and open smaller stores, typically in markets where it is hard to develop larger sites, while
experimenting with opening some very large format stores. We currently operate nine stores in excess of 65,000 gross square
feet and have an additional 13 stores of that size in development, seven of which are relocations. On average, we are pleased
with the results of these larger format stores, as we believe they will deliver strong returns over time as they appeal to a
broader customer base, take longer to reach capacity, and create a higher barrier to entry, making them less vulnerable to