Company Produces Record Sales and Delivers EPS of $0.37;
Company Provides Fourth Quarter Guidance
AUSTIN, Texas, July 27, 2016 (GLOBE NEWSWIRE) -- Whole Foods Market, Inc. (NASDAQ:WFM) today reported results
for the 12-week third quarter ended July 3, 2016. For the quarter, total sales increased to a record $3.7 billion.
Comparable store sales decreased 2.6%. Net income was $120 million, or 3.2% of sales, and diluted earnings per share were
$0.37. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) were $326 million, or 8.8% of sales, and
adjusted return on invested capital was 13.0%. Please refer to the reconciliation of GAAP measures to non-GAAP measures at
the end of this release.
During the quarter, the Company produced $189 million in cash flow from operations, returned $44 million in
quarterly dividends to shareholders, and repurchased $195 million or 6.5 million shares of common stock. The Company ended
the quarter with $1.1 billion of total debt and $1.1 billion of total available capital.
“We delivered record sales of $3.7 billion this quarter along with a sequential improvement in our comparable
store sales trends,” said Walter Robb, co-chief executive officer of Whole Foods Market. “We are continuing to make measurable
progress on fundamentally evolving our business including the successful launch of our new 365 format, expanded value investments,
and increased efforts to better understand and provide personalized offers to our customers. We are seeing some encouraging signs
in terms of our sales and believe our nine-point plan will produce strong returns for our shareholders over the long term.”
“Just two weeks ago, we opened our second 365 by Whole Foods Market store. Designed around affordability
and convenience and supported by enhanced digital experiences, our 365 stores deliver a fresh new format to the
marketplace. Through lower capital and operating costs, we are able to offer great values to our customers, and the
response has been overwhelmingly positive,” said John Mackey, co-founder and co-chief executive officer of Whole Foods
Market. “Our 365 stores are firsts for us in so many ways, from a streamlined operating model, to centralized buying, to
auto-replenishment of inventory. We are already taking advantage of our many learnings to shape and evolve not just future
365 stores but Whole Foods Market stores as well.”
The following table provides information on the Company’s comparable store sales trends for the third quarter
and for the first three weeks of the 12-week fourth quarter. Results for the three-week period reflect the most recent data
available but represent a short period of time and may not be indicative of results for the full quarter.
| |
Comps |
|
Change in
Transactions |
|
Change in
Basket Size |
|
| Q3 ended July 3, 2016 |
(2.6 |
)% |
|
(2.7 |
)% |
|
0.1 |
%* |
|
| Q4 through July 24, 2016 |
(2.4 |
)% |
|
|
|
|
|
*A decline in average price per item was more than offset by an increase in items per basket.
Gross margin declined 89 basis points to 34.7% driven by an increase in cost of goods sold as a percentage of
sales, primarily reflecting the Company’s value efforts. LIFO was a $2 million credit in the current year versus no charge
last year, a positive impact of five basis points year over year.
SG&A increased 11 basis points to 28.5% of sales. An 82 basis point improvement in wages was more than
offset by higher healthcare, depreciation, marketing and technology expenses as a percentage of sales. Higher-than-expected
healthcare expenses were due to an increase in catastrophic claims and costs for certain prescription medicines.
Comparable store sales by age class for the trailing four quarters are provided in the following table.
| |
|
Trailing
Four-Quarter Comps |
|
# of Stores |
|
% of Square
Footage |
|
Average Age
(s.f. weighted) |
| > 11 years |
|
(2.7 |
)% |
|
189 |
|
38 |
% |
|
17.7 years |
| 5 to 11 years |
|
(2.9 |
)% |
|
107 |
|
33 |
% |
|
8.0 years |
| < 5 years |
|
1.5 |
% |
|
124 |
|
30 |
% |
|
2.7 years |
| All comparable stores |
|
(1.9 |
)% |
|
420 |
|
100 |
% |
|
9.9 years |
| |
|
|
|
|
|
|
|
|
|
|
Year-to-Date Results
For the 40-week period ended July 3, 2016, total sales increased 2.3% to $12.2 billion. Comparable store sales decreased
2.4%. Average weekly sales per store were $695,000, translating to sales per gross square foot of approximately $935.
Net income was $419 million, or 3.4% of sales, diluted earnings per share were $1.27, and EBITDA was $1.1 billion, or 8.8% of
sales.
Year to date, the Company has produced $764 million in cash flow from operations, invested $521 million in
capital expenditures, returned $133 million in quarterly dividends to shareholders, and repurchased $929 million or 31.2 million
shares of common stock.
Growth and Development
In the third quarter, the Company opened 12 new stores, including the first 365 by Whole Foods Market™ store in Silver Lake,
CA. In the fourth quarter, the Company has opened one 365 and two Whole Foods Market stores and plans to open two additional
stores, including one 365 and one Whole Foods Market store.
The Company recently signed four new leases, including two relocations, for one 365 and three Whole Foods Market
stores. The new 365 lease is 30,000 square feet and located in Atlanta, GA. The Whole Foods Market leases average
47,000 square feet and are located in Los Angeles, CA; New York City, NY; and Pittsburgh, PA.
The Company sees potential for 1,200 Whole Foods Market stores in the United States, with the new 365 format
expanding the growth opportunity beyond 1,200 stores. The following table provides additional information about the Company’s new
store openings and leases in development for Whole Foods Market and 365 stores scheduled to open through fiscal year 2021.
| |
|
|
|
|
|
Current Leases Signed: |
| New Store Information |
|
FY15 |
|
FY16 YTD |
|
WFM |
365 |
Total |
| Number of stores (including relocations) |
|
38 |
|
|
26 |
|
|
86 |
|
20 |
|
106 |
|
| Relocations |
|
6 |
|
|
2 |
|
|
17 |
|
0 |
|
17 |
|
| Percentage in new markets |
|
11 |
% |
|
23 |
% |
|
16 |
% |
25 |
% |
18 |
% |
| Total square footage |
|
1,653,000 |
|
|
1,104,000 |
|
|
3,972,000 |
|
522,000 |
|
4,494,000 |
|
| |
|
|
|
|
|
|
|
|
Fourth Quarter Outlook
If comparable store sales in the fourth quarter are in line with the 2.4% quarter-to-date decrease and healthcare cost
trends continue, the Company would expect sales growth of approximately 2% and diluted earnings per share of $0.23 to $0.24 for the
quarter. While the Company is hopeful that comps will improve over the remainder of the quarter as comparisons get easier and
sales-building initiatives gain traction, the Company expects some ongoing offsetting impact from its value strategy and
disinflation. The Company has opened three new stores and expects to open two additional stores in the quarter.
The Company notes that average weekly sales and gross margin are lowest in the fourth fiscal quarter due to
seasonally slower sales during the summer months. In addition, results in the fourth quarter of the prior year included asset
impairment and restructuring charges of $80 million and a LIFO credit of $2 million.
The Company expects ending square footage growth of approximately 7% for fiscal year 2016 and 6% for fiscal year
2017. The Company will provide other fiscal year 2017 targets next quarter.
About Whole Foods Market
Founded in 1978 in Austin, Texas, Whole Foods Market is the leading natural and organic foods supermarket, the first national
“Certified Organic” grocer, and uniquely positioned as America’s Healthiest Grocery Store™. In fiscal year 2015, the Company
had sales of approximately $15 billion and currently has 455 stores in the United States, Canada, and the United Kingdom.
Whole Foods Market employs approximately 87,000 team members and has been ranked for 19 consecutive years as one of the “100 Best
Companies to Work For” in America by Fortune magazine. For more information, please visit www.wholefoodsmarket.com.
Disclaimer on Forward-looking Statements
Certain statements in this press release and from time to time in other filings with the Securities and Exchange Commission, news
releases, reports, and other written and oral communications made by us and our representatives, constitute forward-looking
statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements
are often identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “continue,” “could,” “can,” “may,” “will,”
“likely,” “depend,” “should,” “would,” “plan,” “predict,” “target,” and similar expressions, and include references to assumptions
and relate to our future prospects, developments and business strategies. Except for the historical information contained
herein, the matters discussed in this press release are forward-looking statements that are based on the Company’s current
assumptions and involve risks and uncertainties that may cause our actual results to be materially different from such
forward-looking statements and could materially adversely affect our business, financial condition, operating results and cash
flows. These forward-looking statements may include comments relating to, among other things, future earnings per share and
the Company’s intention to obtain additional debt in the near term and to make planned share repurchases, some of which are subject
to risks and uncertainties relating to general business conditions, conditions in the credit and capital markets, changes in
overall economic conditions that impact consumer spending, including fuel prices and housing market trends, the impact of
competition and other factors which are often beyond the control of the Company, as well other risks listed in the Company’s Annual
Report on Form 10-K for the fiscal year ended September 27, 2015 and Quarterly Report on Form 10-Q for the second quarter ended
April 10, 2016, and other risks and uncertainties not presently known to us or that we currently deem immaterial. We wish to
caution you that you should not place undue reliance on such forward-looking statements, which speak only as of the date on which
they were made. We do not undertake any obligation to update forward-looking statements.
The Company will host a conference call today to discuss this earnings announcement at 4:00 p.m. CT. The
dial-in number is (800) 862-9098, and the conference ID is “Whole Foods.” A simultaneous audio webcast will be available at
www.investor.wholefoodsmarket.com.
| |
|
|
|
|
|
|
|
| Whole Foods Market, Inc. |
|
|
|
|
|
|
|
| Consolidated Statements of Operations
(unaudited) |
|
|
|
|
|
|
|
| (In millions, except per share amounts) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
12 weeks ended |
|
40 weeks ended |
| |
|
|
July 3, 2016 |
|
July 5, 2015 |
|
July 3, 2016 |
|
July 5, 2015 |
| Sales |
$ |
3,703 |
|
|
$ |
3,632 |
|
|
$ |
12,227 |
|
|
$ |
11,951 |
|
| Cost of goods sold and occupancy costs |
|
2,417 |
|
|
|
2,339 |
|
|
|
8,010 |
|
|
|
7,721 |
|
| |
Gross profit |
|
1,286 |
|
|
|
1,293 |
|
|
|
4,217 |
|
|
|
4,230 |
|
| Selling, general and
administrative expenses |
|
1,057 |
|
|
|
1,032 |
|
|
|
3,458 |
|
|
|
3,392 |
|
| |
Operating income before pre-opening and store closure |
|
229 |
|
|
|
261 |
|
|
|
759 |
|
|
|
838 |
|
| Pre-opening expenses |
|
18 |
|
|
|
12 |
|
|
|
49 |
|
|
|
53 |
|
| Relocation, store closure and
lease termination costs |
|
2 |
|
|
|
2 |
|
|
|
8 |
|
|
|
12 |
|
| |
Operating income |
|
209 |
|
|
|
247 |
|
|
|
702 |
|
|
|
773 |
|
| Interest expense |
|
(12 |
) |
|
|
- |
|
|
|
(30 |
) |
|
|
- |
|
| Investment and other income
(expense) |
|
(1 |
) |
|
|
5 |
|
|
|
8 |
|
|
|
12 |
|
| |
Income before income taxes |
|
196 |
|
|
|
252 |
|
|
|
680 |
|
|
|
785 |
|
| Provision for income taxes |
|
76 |
|
|
|
98 |
|
|
|
261 |
|
|
|
306 |
|
| |
Net income |
$ |
120 |
|
|
$ |
154 |
|
|
$ |
419 |
|
|
$ |
479 |
|
| |
|
|
|
|
|
|
|
|
|
| Basic earnings per share |
$ |
0.37 |
|
|
$ |
0.43 |
|
|
$ |
1.27 |
|
|
$ |
1.33 |
|
| Weighted average shares outstanding |
|
320.6 |
|
|
|
358.5 |
|
|
|
328.4 |
|
|
|
359.6 |
|
| |
|
|
|
|
|
|
|
|
|
| Diluted earnings per share |
$ |
0.37 |
|
|
$ |
0.43 |
|
|
$ |
1.27 |
|
|
$ |
1.32 |
|
| Weighted average shares outstanding, diluted
basis |
|
321.2 |
|
|
|
360.5 |
|
|
|
329.3 |
|
|
|
362.2 |
|
| |
|
|
|
|
|
|
|
|
|
| Dividends declared per common share |
$ |
0.135 |
|
|
$ |
0.130 |
|
|
$ |
0.405 |
|
|
$ |
0.390 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
A reconciliation of the numerators and denominators of the basic and
diluted earnings per share calculations follows:
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
12 weeks ended |
|
40 weeks ended |
| |
|
|
July 3, 2016 |
|
July 5, 2015 |
|
July 3, 2016 |
|
July 5, 2015 |
| Net income |
|
|
|
|
|
|
|
| (numerator for basic and diluted earnings per
share) |
$ |
120 |
|
|
$ |
154 |
|
|
$ |
419 |
|
|
$ |
479 |
|
| Weighted average common shares outstanding |
|
|
|
|
|
|
|
| (denominator for basic earnings per share) |
|
320.6 |
|
|
|
358.5 |
|
|
|
328.4 |
|
|
|
359.6 |
|
| |
Incremental common shares attributable to dilutive effect |
|
|
|
|
|
|
|
| |
of share-based awards |
|
0.6 |
|
|
|
2.0 |
|
|
|
0.9 |
|
|
|
2.6 |
|
| Weighted average common shares outstanding and |
|
|
|
|
|
|
|
| potential additional common shares outstanding |
|
|
|
|
|
|
|
| (denominator for diluted earnings per
share) |
|
321.2 |
|
|
|
360.5 |
|
|
|
329.3 |
|
|
|
362.2 |
|
| |
|
|
|
|
|
|
|
|
|
| Basic earnings per share |
$ |
0.37 |
|
|
$ |
0.43 |
|
|
$ |
1.27 |
|
|
$ |
1.33 |
|
| Diluted earnings per share |
$ |
0.37 |
|
|
$ |
0.43 |
|
|
$ |
1.27 |
|
|
$ |
1.32 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Whole Foods Market, Inc. |
|
|
|
|
|
|
|
| Consolidated Statements of Comprehensive Income
(unaudited) |
|
|
|
|
|
|
|
| (In millions) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
12 weeks ended |
|
40 weeks ended |
| |
|
|
July 3, 2016 |
|
July 5, 2015 |
|
July 3, 2016 |
|
July 5, 2015 |
| Net income |
$ |
120 |
|
|
$ |
154 |
|
|
$ |
419 |
|
|
$ |
479 |
|
| Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
| |
Foreign currency translation adjustments |
|
(1 |
) |
|
|
3 |
|
|
|
(1 |
) |
|
|
(15 |
) |
| Other
comprehensive income (loss), net of tax |
|
(1 |
) |
|
|
3 |
|
|
|
(1 |
) |
|
|
(15 |
) |
| Comprehensive income |
$ |
119 |
|
|
$ |
157 |
|
|
$ |
418 |
|
|
$ |
464 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Whole Foods Market, Inc. |
|
|
|
| Consolidated Balance Sheets
(unaudited) |
|
|
|
| (In millions) |
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| Assets |
July 3, 2016 |
|
September 27, 2015 |
| Current assets: |
|
|
|
| |
Cash and cash equivalents |
$ |
472 |
|
|
$ |
237 |
|
| |
Short-term investments - available-for-sale
securities |
|
153 |
|
|
|
155 |
|
| |
Restricted cash |
|
123 |
|
|
|
127 |
|
| |
Accounts receivable |
|
319 |
|
|
|
218 |
|
| |
Merchandise inventories |
|
523 |
|
|
|
500 |
|
| |
Prepaid expenses and other current assets |
|
147 |
|
|
|
108 |
|
| |
Deferred income taxes |
|
188 |
|
|
|
199 |
|
| |
|
Total current assets |
|
1,925 |
|
|
|
1,544 |
|
| Property and equipment, net of accumulated depreciation and
amortization |
|
3,376 |
|
|
|
3,163 |
|
| Long-term investments - available-for-sale securities |
|
- |
|
|
|
63 |
|
| Goodwill |
|
710 |
|
|
|
710 |
|
| Intangible assets, net of accumulated amortization |
|
76 |
|
|
|
79 |
|
| Deferred income taxes |
|
143 |
|
|
|
144 |
|
| Other assets |
|
45 |
|
|
|
38 |
|
| |
Total assets |
$ |
6,275 |
|
|
$ |
5,741 |
|
| |
|
|
|
|
|
| Liabilities and
Shareholders’ Equity |
|
|
|
| Current liabilities: |
|
|
|
| |
Current installments of long-term debt and capital lease
obligations |
$ |
3 |
|
|
$ |
3 |
|
| |
Accounts payable |
|
292 |
|
|
|
295 |
|
| |
Accrued payroll, bonus and other benefits due team
members |
|
409 |
|
|
|
436 |
|
| |
Dividends payable |
|
43 |
|
|
|
45 |
|
| |
Other current liabilities |
|
577 |
|
|
|
473 |
|
| |
|
Total current liabilities |
|
1,324 |
|
|
|
1,252 |
|
| Long-term debt and capital lease obligations, less current
installments |
|
1,049 |
|
|
|
62 |
|
| Deferred lease liabilities |
|
626 |
|
|
|
587 |
|
| Other long-term liabilities |
|
91 |
|
|
|
71 |
|
| |
Total
liabilities |
|
3,090 |
|
|
|
1,972 |
|
| |
|
|
|
|
|
| Commitments and contingencies |
|
|
|
| |
|
|
|
|
|
| Shareholders’ equity: |
|
|
|
| Common stock, no par value, 1,200 shares
authorized; |
|
|
|
| |
377.0 and 377.1 shares issued; 318.8 and 348.9 shares
outstanding |
|
|
|
| |
at 2016 and 2015, respectively |
|
2,924 |
|
|
|
2,904 |
|
| Common stock in treasury, at cost, 58.2 and 28.2 shares
at 2016 and 2015, respectively |
|
(2,014 |
) |
|
|
(1,124 |
) |
| Accumulated other comprehensive loss |
|
(29 |
) |
|
|
(28 |
) |
| Retained earnings |
|
2,304 |
|
|
|
2,017 |
|
| |
Total
shareholders’ equity |
|
3,185 |
|
|
|
3,769 |
|
| |
Total liabilities and
shareholders’ equity |
$ |
6,275 |
|
|
$ |
5,741 |
|
| |
|
|
|
|
|
| Whole Foods Market, Inc. |
|
|
|
| Consolidated Statements of Cash Flows
(unaudited) |
|
|
|
| (In millions) |
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
40 weeks ended |
| |
|
|
|
July 3, 2016 |
|
July 5, 2015 |
| Cash flows from operating
activities |
|
|
|
| Net income |
$ |
419 |
|
|
$ |
479 |
|
| Adjustments to reconcile net income to net cash provided
by operating activities: |
|
|
|
| |
Depreciation and amortization |
|
376 |
|
|
|
331 |
|
| |
Share-based payment expense |
|
39 |
|
|
|
51 |
|
| |
LIFO expense |
|
1 |
|
|
|
3 |
|
| |
Deferred income tax expense |
|
16 |
|
|
|
47 |
|
| |
Excess tax benefit related to exercise of team member
stock options |
|
(4 |
) |
|
|
(10 |
) |
| |
Accretion of premium/discount on marketable
securities |
|
1 |
|
|
|
14 |
|
| |
Deferred lease liabilities |
|
31 |
|
|
|
24 |
|
| |
Other |
|
7 |
|
|
|
10 |
|
| |
Net change in current assets and liabilities: |
|
|
|
| |
|
Accounts receivable |
|
(100 |
) |
|
|
(19 |
) |
| |
|
Merchandise inventories |
|
(25 |
) |
|
|
(47 |
) |
| |
|
Prepaid expenses and other current assets |
|
(39 |
) |
|
|
(4 |
) |
| |
|
Accounts payable |
|
(2 |
) |
|
|
16 |
|
| |
|
Accrued payroll, bonus and other benefits due team
members |
|
(27 |
) |
|
|
26 |
|
| |
|
Other current liabilities |
|
57 |
|
|
|
72 |
|
| |
Net change in other long-term liabilities |
|
14 |
|
|
|
4 |
|
| |
Net cash
provided by operating activities |
|
764 |
|
|
|
997 |
|
| Cash flows from investing
activities |
|
|
|
| Development costs of new locations |
|
(295 |
) |
|
|
(411 |
) |
| Other property and equipment expenditures |
|
(226 |
) |
|
|
(268 |
) |
| Purchases of available-for-sale securities |
|
(311 |
) |
|
|
(458 |
) |
| Sales and maturities of available-for-sale
securities |
|
375 |
|
|
|
497 |
|
| Decrease (increase) in restricted cash |
|
3 |
|
|
|
(19 |
) |
| Payment for purchase of acquired entities, net of cash
acquired |
|
(11 |
) |
|
|
(4 |
) |
| Other investing activities |
|
(12 |
) |
|
|
(8 |
) |
| |
Net cash
used in investing activities |
|
(477 |
) |
|
|
(671 |
) |
| Cash flows from financing
activities |
|
|
|
| Purchases of treasury stock |
|
(929 |
) |
|
|
(188 |
) |
| Common stock dividends paid |
|
(133 |
) |
|
|
(137 |
) |
| Issuance of common stock |
|
17 |
|
|
|
61 |
|
| Excess tax benefit related to exercise of team member
stock options |
|
4 |
|
|
|
10 |
|
| Proceeds from long-term borrowings |
|
999 |
|
|
|
- |
|
| Proceeds from revolving line of credit |
|
300 |
|
|
|
- |
|
| Payments on long-term debt and capital lease
obligations |
|
(306 |
) |
|
|
- |
|
| Other financing activities |
|
(9 |
) |
|
|
(1 |
) |
| |
Net cash
used in financing activities |
|
(57 |
) |
|
|
(255 |
) |
| Effect of
exchange rate changes on cash and cash equivalents |
|
5 |
|
|
|
(4 |
) |
| Net change in cash and cash equivalents |
|
235 |
|
|
|
67 |
|
| Cash and cash equivalents at
beginning of period |
|
237 |
|
|
|
190 |
|
| Cash and cash equivalents at end
of period |
$ |
472 |
|
|
$ |
257 |
|
| |
|
|
|
|
|
|
| Supplemental disclosure of cash
flow information: |
|
|
|
| |
Federal and
state income taxes paid |
$ |
357 |
|
|
$ |
263 |
|
| |
Interest paid |
$ |
27 |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
| Whole Foods Market, Inc. |
|
|
|
|
|
|
|
| Non-GAAP Financial Measures
(unaudited) |
|
|
|
|
|
|
|
| (In millions) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, the Company provides information regarding Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”), Adjusted EBITDA and Free Cash Flow in the press release as additional information
about its operating results. These measures are not in accordance with, or an alternative to, GAAP. The Company’s
management believes that these presentations provide useful information to management, analysts and investors regarding certain
additional financial and business trends relating to its results of operations and financial condition. In addition,
management uses these measures for reviewing the financial results of the Company as well as a component of incentive
compensation. Further, Adjusted EBITDA is used in connection with covenant compliance associated with the Company’s Senior
Notes and Credit Agreement. |
| |
| The Company defines Adjusted EBITDA as EBITDA plus non-cash
share-based payment expense and deferred rent. The following is a tabular reconciliation of the non-GAAP financial
measure Adjusted EBITDA to GAAP net income, which the Company believes to be the most directly comparable GAAP financial
measure. |
| |
|
|
|
|
|
|
|
|
| |
|
12 weeks ended |
|
40 weeks ended |
| EBITDA and Adjusted
EBITDA |
July 3, 2016 |
|
July 5, 2015 |
|
July 3, 2016 |
|
July 5, 2015 |
| Net income |
$ |
120 |
|
|
$ |
154 |
|
|
$ |
419 |
|
|
$ |
479 |
|
| Provision for income taxes |
|
76 |
|
|
|
98 |
|
|
|
261 |
|
|
|
306 |
|
| Interest expense |
|
12 |
|
|
|
- |
|
|
|
30 |
|
|
|
- |
|
| Investment and other expense
(income) |
|
1 |
|
|
|
(5 |
) |
|
|
(8 |
) |
|
|
(12 |
) |
| |
Operating income |
|
209 |
|
|
|
247 |
|
|
|
702 |
|
|
|
773 |
|
| Depreciation and amortization |
|
117 |
|
|
|
106 |
|
|
|
376 |
|
|
|
331 |
|
| |
EBITDA |
|
326 |
|
|
|
353 |
|
|
|
1,078 |
|
|
|
1,104 |
|
| Share-based payment expense |
|
11 |
|
|
|
14 |
|
|
|
39 |
|
|
|
51 |
|
| Deferred rent |
|
12 |
|
|
|
8 |
|
|
|
36 |
|
|
|
27 |
|
| |
Adjusted EBITDA |
$ |
349 |
|
|
$ |
375 |
|
|
$ |
1,153 |
|
|
$ |
1,182 |
|
| |
|
|
|
|
|
|
|
|
| The Company defines Free Cash Flow as net cash provided
by operating activities less capital expenditures. The following is a tabular reconciliation of the Free Cash Flow non-GAAP
financial measure. |
| |
|
|
|
|
| |
|
12 weeks ended |
|
40 weeks ended |
| Free Cash Flow |
July 3, 2016 |
|
July 5, 2015 |
|
July 3, 2016 |
|
July 5, 2015 |
Net cash provided by operating activities
|
$ |
189 |
|
|
$ |
287 |
|
|
$ |
764 |
|
|
$ |
997 |
|
Development costs of new locations
|
|
(98 |
) |
|
|
(116 |
) |
|
|
(295 |
) |
|
|
(411 |
) |
Other property and equipment
expenditures
|
|
(85 |
) |
|
|
(104 |
) |
|
|
(226 |
) |
|
|
(268 |
) |
| |
Free Cash Flow |
$ |
6 |
|
|
$ |
67 |
|
|
$ |
243 |
|
|
$ |
318 |
|
| |
|
|
|
|
|
|
|
|
| Whole Foods Market, Inc. |
|
|
|
| Non-GAAP Financial Measures
(unaudited) |
|
|
|
| (In millions) |
|
|
|
| |
|
|
|
|
| In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, the Company provides information regarding Return on Invested Capital (“ROIC”) and
Adjusted ROIC as additional information about its operating results. These measures are not in accordance with, or an
alternative to, GAAP. The Company’s management believes this presentation provides useful information to management,
analysts and investors regarding certain additional financial and business trends relating to its results of operations and
financial condition. In addition, management uses this measure for reviewing the financial results of the Company as well
as a component of incentive compensation. The Company defines ROIC as ROIC earnings divided by average invested
capital. ROIC earnings and adjustments to ROIC earnings are defined in the following tabular reconciliation.
Invested capital reflects a trailing four-quarter average. |
| |
|
|
|
|
| |
|
52 weeks ended |
| ROIC |
July 3, 2016 |
|
July 5, 2015 |
| Net income |
$ |
475 |
|
|
$ |
607 |
|
| Interest expense, net of tax |
|
18 |
|
|
|
- |
|
| |
ROIC earnings |
|
493 |
|
|
|
607 |
|
| Total rent expense, net of tax1 |
|
279 |
|
|
|
258 |
|
| Estimated depreciation on
capitalized operating leases, net of tax2 |
|
(186 |
) |
|
|
(172 |
) |
| |
ROIC earnings, including the effect of capitalized
operating leases |
$ |
586 |
|
|
$ |
693 |
|
| |
|
|
|
|
| Average working capital, excluding current portion of long-term
debt |
$ |
598 |
|
|
$ |
525 |
|
| Average property and equipment, net |
|
3,240 |
|
|
|
2,999 |
|
| Average other assets |
|
1,016 |
|
|
|
1,090 |
|
| Average other liabilities |
|
(682 |
) |
|
|
(620 |
) |
| |
Average invested capital |
|
4,172 |
|
|
|
3,994 |
|
| Average estimated asset base of
capitalized operating leases3 |
|
3,632 |
|
|
|
3,378 |
|
| |
Average invested capital, including the effect of
capitalized operating leases |
$ |
7,804 |
|
|
$ |
7,372 |
|
| |
|
|
|
|
| ROIC |
|
11.8 |
% |
|
|
15.2 |
% |
| ROIC, including the effect of capitalized of
operating leases |
|
7.5 |
% |
|
|
9.4 |
% |
| |
|
|
|
|
| |
|
|
|
|
| Adjusted ROIC |
|
|
|
| Net income |
$ |
475 |
|
|
$ |
607 |
|
| Interest expense, net of tax |
|
18 |
|
|
|
- |
|
| Adjustments, net of tax4 |
|
48 |
|
|
|
1 |
|
| |
Adjusted ROIC earnings |
|
541 |
|
|
|
608 |
|
| Total rent expense, net of tax1 |
|
279 |
|
|
|
258 |
|
| Estimated depreciation on
capitalized operating leases, net of tax2 |
|
(186 |
) |
|
|
(172 |
) |
| |
Adjusted ROIC earnings, including the
effect of capitalized operating leases |
$ |
634 |
|
|
$ |
694 |
|
| |
|
|
|
|
| Average working capital, excluding current portion of long-term
debt |
$ |
598 |
|
|
$ |
525 |
|
| Average property and equipment, net |
|
3,240 |
|
|
|
2,999 |
|
| Average other assets |
|
1,016 |
|
|
|
1,090 |
|
| Average other liabilities |
|
(682 |
) |
|
|
(620 |
) |
| |
Average invested capital |
|
4,172 |
|
|
|
3,994 |
|
| Average estimated asset base of
capitalized operating leases3 |
|
3,632 |
|
|
|
3,378 |
|
| |
Average invested capital, including the effect of
capitalized operating leases |
$ |
7,804 |
|
|
$ |
7,372 |
|
| |
|
|
|
|
| Adjusted ROIC |
|
13.0 |
% |
|
|
15.2 |
% |
| Adjusted ROIC, including the effect of
capitalized operating leases |
|
8.1 |
% |
|
|
9.4 |
% |
| |
|
|
|
|
1 Total rent includes minimum base rent of all
tendered leases
|
2 Estimated depreciation equals
two-thirds of total rent expense
|
3 Estimated asset base equals
eight times total rent expense
|
4 Adjustments include non-cash asset
impairment charges and Q4 2015 restructuring charge
|
| |
|
|
|
|
Investor Relations Contact: Cindy McCann VP of Investor Relations 512.542.0204 Media Contact: Robin Kelly Robin.Kelly@wholefoods.com 617.417.3895
