"We have stores signed and in our pipeline to meet that range and we have confidence it will happen." says Jim Sud, executive vice president of growth and business development. "We're starting to see more opportunities in the real estate arena in terms of better pricing, in terms of rent. We're hopeful that the silver lining in what appears to be a recession will result in lower construction costs." Six of the new stores will be in new markets: Portland, OR, Kansas City, MO, Toronto, Pittsburgh, Albuquerque and Las Vegas.
Sud and other Whole Foods executives addressed the Austin-based company's plans Wednesday in a conference call about its financial results. With 130 stores, the company is the largest retailer of natural and organic foods.
John Mackey, the company's CEO, says Whole Foods stores will continue to get bigger than the current 35,000-sf model and could approach 70,000 sf. Becoming familiar with big stores was one reason Whole Foods bought several Atlanta-based Harry's Farmers Market stores earlier this year. The transaction closed two weeks ago.
For the fourth quarter ending Sept. 30, Whole Foods reported net income of $11 million, 19 cents per share, on revenue of $576.5 million. That compares to a net loss of $42 million, a loss of 63 cents per share, on revenue of $438.3 million in its 2000 fourth quarter.
For 2001, the company posted net income of $69.4 million, $1.24 per share, on $2.3 billion in revenue. In 2000, its net loss was $4.8 million, a loss of 9 cents per share, on revenue of $1.8 billion.
"Despite a slowing economy and sharp increase in utilities expense (40% higher than 2000), we delivered strong top-line and bottom-line growth," Mackey said in a statement. The company expects sales to grow 15% to 20% in its 2002 fiscal year.
In response to a question, Mackey and Sud said Whole Foods stores will continue to get bigger, keeping with its history. "We've been finding and signing and opening larger stores than we ever have before," Mackey said. "And I don't honestly know what the upper limit on the square footage is." He said Whole Foods has opened 50,000-sf stores "that are among the highest volume stores in the company. Is that the upward-limit range? I don't think it probably is. I see no evidence of that."
The three Harry's Farmers Markets will serve as labs for Whole Foods managers. The Atlanta-area stores are 54,000 sf, 66,000 sf and 70,000 sf. "We want to learn to operate stores that are 60,000 sf and 70,000 sf stores because we'd like to open a few of those," Mackey said.
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