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WFM’s Sales Comps and Net Income Slid in Fiscal 4Q16

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Nov. 8 2016, Updated 10:05 a.m. ET

WFM’s net income slid 16.7% in fiscal 4Q16

Whole Foods Market (WFM) reported its results for fiscal 4Q16[1. quarter ended September 25, 2016] on November 2, 2016. The company reported a 1.7% year-over-year (or YoY) increase in its top line to $3.5 billion. Its net income stood at $88 million, down 16.7% compared to fiscal 4Q15.

WFM’s net margin fell from 3.1% to 2.5% in fiscal 4Q15. Diluted earnings per share fell 6.7% YoY to $0.28.

John Mackey, co-founder and CEO of Whole Foods Market, noted in the earnings statement, “In a year that presented many headwinds for food retailers, we made measurable progress on positioning our company for continued success while producing industry-leading sales per gross square foot and healthy returns on invested capital.”

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WFM’s sales comps face headwinds

Whole Foods Market’s (WFM) same-store sales fell for the fifth consecutive quarter and stood at -2.6% in fiscal 4Q16. The drop was a result of a 4.2% decline in the number of transactions. Average basket size, however, improved 1.6% during the quarter.

Supermarket peers Kroger (KR), Supervalu (SVU), and Sprouts Farmers Market (SFM) have also reported recent softening in comps. Rising competition and persistent deflation have been taking a toll on the comps and margins of grocers this year.

Kroger reported comps growth of 1.7% in the last quarter compared to an average of 4.3% in the last 24 quarters. Sprouts, which reported its results on November 3, 2016, reported the slowest comps growth since the company was publicly listed in July 2013. Its sales comps stood at 1.3% compared to an average of 8.8% between fiscal 2013 and fiscal 2015.

ETF investors seeking to add exposure to Whole Foods Market can consider the First Trust Consumer Staples AlphaDEX ETF (FXG), which invests ~3.3% of its portfolio in the company.

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