http://www.morningstar.com/earnings/58798255-whole-foods-market-inc-wfm-q4-2013.aspx

Whole Foods Market Inc WFM
Q4 2013 Earnings Call Transcript

Transcript Call Date 11/06/2013

In summary, fiscal year 2013 was yet another record-breaking year on many levels. Our sales approached $13 billion, translating to sales per gross square foot of $972. We opened 32 new stores, expanding into 10 new markets and increasing our ending square footage 8% to $13.8 million.

We improved operating margin 48 basis points to 6.8%, generated over $1.2 billion in EBITDA, and exceeded our initial split-adjusted EPS guidance of $1.42 to $1.44 by growing earnings per share of 19% year-over-year to $1.47.

Our outstanding financial performance generated over $1 billion in operating cash flow and $472 million in free cash flow. We returned $508 million in dividends to our shareholders, repurchased $125 million of common stock, and ended the year with $1.4 billion in cash and investments.

We remain well positioned to internally fund our accelerated new store growth, while maintaining a healthy cash balance and reflecting confidence in our future growth and cash flow generation, today we announced a 20% increase and a quarterly dividend to $0.12 per share and an additional $500 million in stock repurchase authorization, bring our total available authority to $800 million.

Turning now to our revised outlook for fiscal year 2014; for the first five weeks of Q1, comparable store sales increased 5.8%, roughly in line with our Q4 results. Based on recent trends, we believe it is prudent to take a more conservative point of view on our sales and earnings outlook for the year.

For fiscal year 2014, we now expect sales growth of 11% to 13%, comparable store sales growth of 5.5% to 7%, identical store sales growth of 5% to 6.5%, and diluted earnings per share of $1.65 to $1.69, an increase of 12% to 15%. Please see the guidance table of our press release for additional detail.

While resetting expectations is always difficult, we want to underscore that we have just delivered our fourth consecutive year of increases in new store openings while producing improvements in operating margin and higher returns on invested capital, and our outlook for fiscal year 2014 reflects a continuation of these trends.

Each week, over 7 million customers visit our 367 stores in 40 states and three countries. In 2005, it was a major milestone for us to report that we had six stores averaging $1 million in sales per week. We now have over 50 stores achieving that level. Yes, food retailing is more competitive than ever, and with the growing demand for fresh, healthy foods, it seems like everyone is adding to or expanding their offering of natural and organic products. However, we believe the strength of these numbers highlights our ability to innovate and to compete, the unique power of our brand and an excitement our stores create within their communities. With 47 new leases signed over the last 12 months, we have 94 stores in our development pipeline and see demand for 1,000 Whole Foods Market stores in the United States alone.

We will now take questions. Please limit yourself to one question at a time, so that everyone has an opportunity to participate. Our call will end at 4.30 Central Time. Thank you.

Read our Earnings Call Transcript disclaimer.
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