Whole Foods Market's profit surges in 1Q

(AP) — Whole Foods Market Inc. took another step forward in its recovery as strong sales sent its first-quarter profit up nearly 79 percent and it raised its outlook for the year.

Whole Foods was battered during the recession as shoppers cut back on spending at the natural and organic grocer. The company retooled — cutting costs, limiting growth and upping its low-priced offerings to improve its profitability and its popularity among consumers.

The company began to see the effort pay off in recent quarters. That continued in the first quarter, as more shoppers came into its stores and spent more during the quarter, sending sales up 7 percent to $27.8 million.

Whole Foods, based in Austin, Texas, said it earned $49.7 million, or 32 cents per share, for the quarter. That's up from $27.8 million, or 20 cents per share, earned in the same quarter last year.

The results easily beat analyst expectations of 26 cents per share on revenue of $2.6 billion, according Thomson Reuters.

"Their core customer is finally showing some confidence again," said Matt Arnold, an analyst with Edward Jones. "Not only are they returning to the store but the ones that are there — they are spending again. It's a powerful combination on top of a better economic picture."

Sales at stores open at least a year, considered a key measure of performance because it strips away the impact of new store openings, grew 3.5 percent for the quarter.

Whole Foods said it saw many new customers during the quarter and more spent by its existing customers.

If what they bought is any indication, shoppers appear more confident. Sales from the center of the store, where canned and other nonperishable items are housed, grew as the recession hit. This quarter, shoppers were buying more organic meat, produce and items from across the store during the most recent quarter, the company said.

Whole Foods CEO John Mackey said the results exceeded the company's expectations and said there are many reasons to be bullish about its future. However, he said the company's guidance reflects some caution given the uncertain economy, competition and consumer behavior.

The company now expects to earn $1.20 to $1.25 per share for the year, compared with its previous estimate of $1.05 to $1.10. Analysts estimate the company will earn $1.10 for the year.

Whole Foods, like many companies, is benefiting by comparison to last year, when the recession hit sales hard.

Shares of Whole Foods rocketed $2.43, or 8 percent, to $32.95 in after-hours trading after rising 3 percent to $30.52 during the trading day.