Whole Foods Market Earnings Call Nuggets: Timing of Store Openings and a Holiday Shift
Timing of Store Openings
Priscilla Tsai – JPMorgan: This is Priscilla Tsai in for Ken today. So, you just on your guidance of percent of sales from new stores from 6% to 7% now just 6%. So, I’m just wondering if you can help us understand what drove this change and is it just sort of a timing of store openings issue or is there something different you’re expecting from new store productivity?
Cindy McCann – Global VP. IR: There is nothing significantly different that we are expecting. It’s just fine-tuning our results now that we have 19-weeks behind us.
Priscilla Tsai – JPMorgan: Could you give us any more color on any impact from (an email) or the counter shift on the quarter-to-date comp number that you report in?
David Lannon – EVP, Operations: This is David Lannon. Our North Atlantic region was the region that was most impacted. We’ve gained so much experience with dealing with storms with Superstorm Sandy, what happened in Hurricanes in Norlands. We were able to nearly get all of our stores reopened. We only had one store without power. The challenge was these customers couldn’t get to the stores for up to three days. So, it is definitely an impact for us our stores throughout New England as well as it New York. We’re still trying to quantify what that number is, but we’re really pleased with our efforts to how quickly we are able to reopen the stores and that’s kind of what happened.
A Holiday Shift
Karen Short – BMO Capital Markets: Just following on that, you commented on a holiday shift, can you just clarify what exactly the holiday shift is and then I had another question?
Walter Robb – Co-Chief Executive Officer: The Valentine’s Day happened earlier this year — last year than this year. So, that’s the leap year.
Cindy McCann – Global VP. IR: Karen, this is Cindy. The Valentine’s Day was on Tuesday last year, so we would have expected to see sales on Sunday from that and then it’s making it hard to quantify the impact of the storms as right now we’re seeing the negative impact of that shift week today.
David Lannon – EVP, Operations: We’ve only got three weeks in the second quarter numbers so far, so we’ve been affected by Valentine’s Day and in storm. So, personally I wouldn’t read too much into those three weeks, it’s too early to tell anything.
Karen Short – BMO Capital Markets: Then I’m just curious, I know you kind of seemed cautious in your comments on I guess forward-looking gross margin etcetera and it seems like to me that caution is conservative because things are really going very well for you guys that’s turning specifically to gross margins. It seems like your price gap is really narrowed versus your competition and I guess I’m wondering given the quality of your offering and in everything that you guys have been working towards in terms of price investments. Do you really need to keep investing price?
David Lannon – EVP, Operations: Yeah, we’re going to keep investing in price. You say the gaps narrowed that’s true, we’d like to eliminate it while maintain high quality. We think that’s competitively very strong position to be so yeah, we’re going to continue. This is very important we think that – we think our competition is increasing around the country and we think that we’re going to continue to invest. In price we’re going to continue to try to improve our value proposition while continuing to differentiate and evolve our product mix, we’re going to do both.
Walter Robb – Co-Chief Executive Officer: Let me add a little, this is Walter. I’m going to say that Karen it’s a really moving environment out there and we want to give our self the room to be able to continue to improve our position. The bigger price year that I know you share this view is that the markets getting bigger and we’re going for the big price which is those folks that are not eating as healthy there. The specialty food market is very large and we think by continuing to improve our position we have actually drove much bigger market than we’re currently serving. So, this is an important point that giving our self the room to continue to do this.
Glenda Flanagan – EVP & CFO: We do just want to remind everyone that gross margins that we had last year in Q2 and Q3 were extremely strong and as we said at that time, we did think that level of margin was sustainable. So, while in our own forecasting we are projecting sequential increases in Q2 and Q3 as we would normally see seasonally we are not projecting year-over-year increases like we saw in Q1.
Karen Short – BMO Capital Markets: But just to paraphrase, it’s fair to say you don’t really see any change in the environment from a competitive or consumer perspective, you just think this is an opportunity continue to gain share?
David Lannon – EVP, Operations: That’s what we are thinking, that’s our strategy. Yeah, that’s how we see it.
A Closer Look: Whole Foods Market Earnings Cheat Sheet>>