Whole Foods 2007 Annual Report Download - page 6

While we expect higher-than-average total sales
growth, we do not expect to produce operating
leverage for the year due primarily to a decrease
in store contribution as well as flat G&A expense
year over year as a percentage of sales. Store
contribution is expected to be negatively impacted
by a higher percentage of sales coming from
new and acquired stores which have a lower
contribution than our existing stores, and
continued, though more moderate, increases
in health care costs as a percentage of sales,
as well as investments in labor and benefits
at the Wild Oats stores. G&A is expected to
be flat as a percentage of sales primarily due
to costs related to the Wild Oats acquisition,
including integration costs and costs related
to fully staffing our three smallest regions
which gained the greatest number of stores
as a percentage of their existing store base.
We have produced very consistent gross margin,
direct store expenses, and G&A as a percentage
of sales over time and believe that, over the long
term, we will continue to deliver healthy earnings
growth through strong sales growth rather than
through significant operating leverage. We believe
the investments we are making today in our
new, acquired and existing stores will result in
substantial earnings growth in the near future.
We are well positioned to achieve our goal
of $12 billion in sales in fiscal year 2010.
With fewer than 300 stores, the majority of
which are in the top metro markets, we have
significant growth opportunities ahead of us.
None of our current markets are saturated; the
top markets allow for a dense concentration
of stores, the majority of which are still
underserved; the success we are seeing in
some of our new markets indicates there are
a lot of opportunities in secondary markets,
and we are very excited about what lies ahead
of us in terms of international expansion.
Given our recent merger, solid historical sales
growth, significant store development pipeline,
and acceleration in store openings, we believe
we are well positioned to achieve our goal of $12
billion in sales in the year 2010. Over the longer
term, however, we believe the sales potential
for Whole Foods Market is much greater than
$12 billion as the market continues to grow
and as our company continues to improve.
We have grown our stock price at an average
compound annual rate of 22% since going
public, and we encourage our shareholders to
stay focused on the long term. We are constantly
evolving, innovating and maturing and have
a demonstrated track record of competing,
executing and delivering compelling results.
GROWTH SINCE IPO
9/30/07 9/29/91* CAGR
NUMBER OF STORES 276 10 23%
SALES $6.6 B $92.5 M 30%
EARNINGS PER SHARE $1.29 $0.08 18%
TEAM MEMBERS 52,6 00 1,100 27%
STOCK PRICE $48.96 $2.13 22%
* 1991 results do not include the impact of subsequent pooling
transactions and accounting restatements. Stock price is
split-adjusted IPO price in January 1992.
Our motto—Whole Foods, Whole People, Whole
Planet™—emphasizes that our vision reaches
far beyond just food retailing. We look forward
to sharing our vision with the rest of the world.
With warmest regards,
John Mackey
Chairman of the Board, Chief Executive Officer,
and Co-Founder