Modest sales growth, comps fall for 6th straight quarter
As we discussed in Part 1 of this series, Whole Foods Market (WFM) reported its fiscal 1Q17[1. quarter ended January 15, 2017] results after the market closed on February 8, 2017.
Whole Foods Market reported a 1.9% increase in sales to $4.9 billion, backed by 13 new stores that opened during the quarter. Sales comps came in negative for the sixth straight quarter, although there has been some firmness in comps and improvement in traffic over the last three quarters.
In 1Q17, Whole Foods Market’s sale comps fell 2.4% as the gains from a 1.5% increase in the average basket size were washed away by a 3.9% decline in the number of transactions.
John Mackey, CEO of Whole Foods Market, noted, “Comps dropped off sharply in the pre-and post-election weeks and then showed nice lifts over Thanksgiving and Christmas weeks.”
Other food retailers have also reported soft comps
Supermarket peers Kroger (KR) and Supervalu (SVU), as well as retailers like Walmart (WMT) and Dollar General (DG), have also reported softening in comps over the last year. Rising competition and persistent deflation have taken a toll on the comps and margins of all food retailers.
Kroger reported one of the slowest quarters in terms of same-store sales growth. Identical supermarket sales (not including fuel) grew 0.1% compared to average growth of 4.3% over the last 24 quarters.
Supervalu is also facing a tough time. Its retail business has seen seven consecutive quarters of negative sales comps.
Dollar General’s comps turned negative for the first time in the last 36 quarters.
ETF investors seeking to add exposure to Whole Foods can consider the First Trust Consumer Staples AlphaDEX ETF (FXG), which invests 4.5% of its portfolio in the company.