Whole Foods doing well in down market
Judging by its most recent quarterly results, it looks like Whole Foods Market (Nasdaq: WFMI) is doing just fine. Net income surged 71 percent to $49.7 million over year-ago levels, while sales increased 7 percent, to $2.6 billion.
Whole Foods, a Motley Fool Stock Advisor recommendation, still carries a substantial $734 million in debt, acquired as part of its purchase of Wild Oats, but it also has unrestricted cash and short-term investments of $482 million. The grocer generated a heartening $79 million in free cash flow in the quarter, so cash is moving in the right direction.
Investors shouldn’t bank on a widespread retail rebound yet, since many consumers are still struggling. However, Whole Foods is performing admirably in a difficult environment. In more good news for shareholders, management raised its fiscal 2010 expectations, projecting overall sales growth of 8.5 percent to 10.5 percent and growth at units open a year or more of 3.5 percent to 5.5 percent.
In its conference call, management spoke optimistically about new health awareness initiatives and positive customer response to its value offerings. It’s also opening smaller-format stores that cost less while still generating impressive results. Meanwhile, some competitors have pulled back from their organic offerings, a real positive for Whole Foods.
The quarterly results shore up the company’s position as a solid long-term stock idea.
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