Whole Foods pushing promotional strategy

by Monica Watrous
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Whole Foods mobile app
As part of its promotional strategy, Whole Foods is introducing digital coupons through its mobile app.

AUSTIN, TEXAS — Whole Foods Market, Inc. posted record sales in the recent quarter, helped by promotional offers that drew more shoppers to its stores. Net income for the first quarter ended Jan. 17 was $157 million, equal to 47c per share on the common stock, which was down 6% from $167 million, or 46c per share, for the prior-year period. Sales for the quarter advanced to $4,829 million, up 3.4% from year-ago sales of $4,671 million.

Walter Robb, Whole Foods
Walter Robb, co-c.e.o. of Whole Foods

“We stepped up our value offerings to customers, primarily through more and deeper promotions, such as our customer appreciation Love Fest and three-day sale in supplements, which were supported through social media, digital ads and select radio ads,” said Walter Robb, co-chief executive officer of the Austin-based retailer, during a Feb. 9 earnings call with financial analysts. “Over the remainder of the year, we plan to continue our promotional strategy, including more personalized offers and increase and broaden our price investment as well.”

As part of its promotional strategy, Whole Foods is introducing digital coupons through its mobile app, which will feature “deep discounts” on everyday staples such as milk, yogurt and granola, as well as seasonal offers, Mr. Robb said.

Whole Foods supplement sale ad
Whole Foods offered a 3-day supplements sale, which drew more shoppers to its stores.

“Coupons have been the top request among users, and now with a simple scan at the register, preloaded digital coupons can automatically be applied to matching items in a shopper’s basket,” Mr. Robb said. “This is a win for customers, a win for us, as well as we will gain actionable customer data on a national scale. Over the coming months, we will expand and improve our offers as well as launch our national digital sales flier, bringing our customers great savings on what they love to their fingertips.”

The digital coupons, which were tested in select markets prior to the national roll-out, are designed to increase customer visits, added David Lannon, executive vice-president of operations.

David Lannon, Whole Foods
David Lannon, executive v.p. of operations

“I would also say that we’re encouraged by activating our customers digitally with some trip driving promotions the last few months, 25c cup of coffee with our friends at Allegro, 99c green smoothies, 25c cookies,” Mr. Lannon said. “Those are things that get people up off the couch, into the store. Hopefully, they’ll continue to buy other things when they come in.”

During the quarter, comparable store sales on a constant currency basis fell 1.8%.

“In addition to headwinds from a tougher comparison and a highly competitive environment, the negative impact from cannibalization increased for the third consecutive quarter,” Mr. Robb said.

The company opened three new stores in the first quarter for a total of 436 stores in the United States, Canada and the United Kingdom.

For the full year, executives expect to deliver sales growth of 3% to 5%, the opening of approximately 30 new stores and comparable store sales in a range of -2% to flat. The company has raised its outlook for adjusted diluted earnings per share to $1.53 or greater, up from $1.50 or greater, based on slightly better-than-expected results in the first quarter.
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