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Whole Foods Market Reports First Quarter Results

Since the fourth quarter earnings release, the Company reduced the size of one store in development by 11,100 square feet and terminated the lease for one store in development totaling 45,000 square feet. The Company also recently signed six new leases in Ottawa, Canada; Danbury, CT; Jamaica Plain, MA; Lynnfield, MA; Marlboro, NJ; and San Antonio, TX. These stores currently are scheduled to open in fiscal year 2012 and beyond. 

The following table provides additional information about the Company's store openings in fiscal years 2010 and 2011 year to date, leases currently tendered but unopened, and total development pipeline (including leases currently tendered) for stores scheduled to open through fiscal year 2014. For accounting purposes, a store is considered tendered on the date the Company takes possession of the space for construction and other purposes, which is typically when the shell of the store is complete or nearing completion. The average tender period, or length of time between tender date and opening date, will vary depending on several factors, one of which is the number of acquired leases, ground leases and owned properties in development, all of which generally have longer tender periods than standard operating leases. 

New Store Information   Stores Opened FY10 Stores Opened FY11 YTD Current Leases Tendered Current Leases Signed
           
Number of stores (including relocations)   16 3 17 56
Number of relocations   0 0 6 8
Number of lease acquisitions,          
 ground leases and owned properties   0 0 4 4
New markets   4 0 1 8
Average store size (gross square feet)   42,600 43,800 40,100 37,800
Total square footage   682,200 131,300 681,100 2,129,000
Average tender period in months   10.9      
Average pre-opening expense per store (incl. rent)   $2.6 mil      
Average pre-opening rent per store   $1.2 mil      
Average development cost (excl. pre-opening)   $11.1 mil      
Average development cost per square foot   $261      

Updated Outlook for Fiscal Year 2011

The following table provides additional information on the Company's updated 2011 outlook.

  Prior FY11 Outlook Current FY11 Outlook Q1 Actual Q2-Q4 Implied Outlook
         
Sales growth 10% - 12% 10.7% - 12.8%  13.8% 9.4% - 12.4%
Comparable store sales growth 5.5% - 7.5% 7.2% - 9.2%  9.1% 6.3% - 9.2%
Two-year comps 12.6% - 14.6% 14.3% - 16.3% 12.6% 15.0% - 17.9%
Identical store sales growth 5.0% - 7.0% 7.0% - 9.0% 9.1% 6.1% - 9.0%
Two-year idents 11.5% - 13.5% 13.5% - 15.5% 11.6% 14.4% - 17.3%
Weighted square footage growth 5% 5% 6% 5%
         
LIFO charge $0 $4.5 - $5.0 mil $2.0 mil $2.5 - $3.0 mil
G&A expenses 3.0% 3.0% 2.9% 3.0%
Pre-opening and relocation costs $52 - $55 mil $50 - $53 mil $11.8 mil $38 - $41 mil
Operating margin 5.0% 5.2% 4.9% 5.3%
EBITDA $780 - $795 mil $800 - $815 mil $234 mil $571 - $581 mil
Net interest expense / (income) $1 - $3 mil ($1) - ($2) mil ($0.3) mil ($0.7) - ($1.7) mil
         
Tax rate 41% 40% 40% 40%
Diluted shares outstanding 173 mil 175 - 176 mil 175 mil 175 - 177 mil
         
Diluted EPS $1.66 - $1.71 $1.76 - $1.80 $0.51 $1.25 - $1.29
YOY % change 16% - 20% 23% - 26% 59% 13% - 16%
Capital expenditures $350 - $400 mil $350 - $400 mil $91 mil $259 - $309 mil

For the first three weeks of the second quarter, identical store sales increased 8.6%, or 15.0% on a two-year basis.  The Company has reported five consecutive quarters of accelerating two-year identical store sales growth, a trend that has continued in the first three weeks of the second quarter.  The low end of the Company's identical store sales guidance for the fiscal year assumes a slight deceleration in identical store sales growth on a two-year basis from the 15.0% two-year idents the Company produced in the first three weeks of the second quarter, while the high end assumes an acceleration in two-year identical store sales growth, albeit at a more moderate rate than in the first quarter and second quarter to date.    

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