Following a stronger-than-expected third quarter financial report, shares of Austin, Texas-based Whole Foods Market Inc. jumped 14% in pre-market trading.
Analysts see bright things in the storeâs future as it reportedly plans to focus on health, wellness and value in the coming months.
Chief executive officer John Mackey said during the companyâs quarterly earnings report on Aug. 4 that he thinks the worst may be behind it.
âIn quarter 3, the recovery in transaction count continued, with average unit price and basket size stabilizing and then improving toward the end of the quarter,â he said. âWe hope these trends are an indication that the level of trading down might be easing.â
|Courtesy Whole Foods Market Inc.|
Produce in particular helped Whole Foods attract value-conscious consumers, Mackey said.
âWe have not experienced significant food deflation outside of produce, where we have been able to offer our customers some fantastic deals,â he said. âWe are seeing many competitors emphasizing value and deemphasizing organic. We have taken advantage of increased supply and lower price available in organic produce to offer great promotions â particularly in organic berries, cherries and grapes.â
While Whole Foods saw a drop in average price per item in produce, Mackey said, the company saw a corresponding pick-up in overall tonnage, âwhich is driving higher gross profit dollars overall,â he said.
Customer demand for the Whole Deal in-store promotion guide also continues to grow. The company did an initial 800,000-copy run for the quarterly guide when it introduced the program last year. That has morphed into a 1.3 million copy run for a bi-monthly publication.
Value and healthy eating
âThe Whole Deal value guide drives basket size and items per basket,â Mackey said.
The average basket containing one of the promotional items totaled $65 with 23 items versus an overall basket average of $33 with nine items.
Whole Foods also plans to reemphasize organic items, Mackey said.
âWhile some competitors appear to be pulling back on organic as they emphasize value more, we are refocusing on our core customers and expanding our organic offerings,â he said. âOur sales growth in organic products is outpacing growth in natural products two to one.â
An Aug. 5 article in the Wall Street Journal suggests Whole Foods plans to focus more on healthful eating than the decadent perception it sometimes garners.
The article said Mackey is encouraging employees with bonuses and increased store discounts for hitting weight loss and other health goals.
The company reportedly plans to launch a âhealthy eatingâ initiative with cooking demonstrations and recipes. Mackey, according to the article, said the company veered off-course and was âselling a bunch of junk.â
âWeâve decided if Whole Foods doesnât take a leadership role in educating people about a healthy diet, who the heck is going to do it,â he said, in the article.