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Earnings Overview: Analyzing Whole Foods’ 3Q16 Results

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Snapshot of the series

Whole Foods Market (WFM) reported its results for fiscal 3Q16 on July 27, 2016. The company’s 3Q16 earnings were in-line with the Wall Street estimates of 37 cents per share. The company, however, missed on the revenue forecasts by $30 million.

The company’s shares closed at $30.61 on July 28, ~9% lower than the previous day’s closing price.

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3Q16 results highlights

  • Total sales increased by 1.9% year-over-year (or YoY) to $3.7 billion.
  • Comparable store sales were down 2.6%.
  • EBITDA stood at $326 million or 8.8% of sales.
  • Net earnings stood at $120 million or 3.2% of sales.

About Whole Foods Market

Whole Foods Market is a leading natural and organic foods supermarket. It’s the country’s first national certified organic grocer. The company operates 446 stores across the United States, Canada, and the United Kingdom.

WFM dominated the US premium organic food market for a long time. However, as conventional retailers such as Walmart (WMT), Kroger (KR), and Costco (COST) have tapped into Whole Foods’ niche market, the company has found it increasingly difficult to maintain its market share.

Whole Foods Market had a market capitalization of ~$9.8 billion on July 28, 2016. WFM is a component of the S&P 500 Index. It has a weight of ~1% in the SPDR S&P Retail ETF (XRT) and ~2.5% in the Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS).

What’s in this series?

This series is an earnings overview of Whole Foods Market’s 3Q16 results. We’ll look at the company’s financial performance and its key drivers, review the management’s guidance, and evaluate the company’s stock performance after the earnings release.

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