As reflected in its outlook, the Company does not expect to produce the same level of EPS growth over the remainder of the year as it produced in the first quarter due primarily to tougher gross margin comparisons, particularly in the second and third quarters of last year, along with its ongoing strategy to expand value offerings across the store to improve its competitive price positioning. As such, the Company does not expect an improvement in gross margin this year, and given first quarter results, this implies lower year-over-year gross margin for the remainder of the year.
In addition, the Company expects a significant year-over-over increase in pre-opening and relocation expense in the fourth quarter based on the opening of 10 to 12 new stores along with a high number of openings in the first quarter of 2014.
|FY13 Prior Outlook||FY13 Current Outlook||Q1 Actual||Q2-Q4 Implied Outlook|
|Sales growth||10% - 12%*||10% - 11%*||14%||9% - 10%*|
|Comparable store sales growth||6.5% - 8.5%||6.6% - 8.0%||7.2%||6.3% - 8.3%|
|Two-year comps||15.2% - 17.2%||15.3% - 16.7%||15.9%||15.0% - 17.0%|
|Identical store sales growth||6.0% - 8.0%||6.3% - 7.7%||7.1%||6.0% - 8.0%|
|Two-year idents||14.4% - 16.4%||14.7% - 16.1%||15.3%||14.4% - 16.4%|
|Three-year idents||22.7% - 24.7%||23.0% - 24.1%||24.3%||22.5% - 24.5%|
|Number of new stores||32 - 34||32 - 34||10||22 - 24|
|% of sales from new stores||6% - 7%||6%||5%||6%|
|Ending square footage growth||8%||8%||8%||8%|
|Pre-opening and relocation costs||$68 - $73 mil||$68 - $73 mil||$18 mil||$50 - $55 mil|
|Operating margin||6.6% - 6.7%||6.6% - 6.7%||6.1%||6.9% - 7.0%|
|EBITDA||$1.18 - $1.20 bil||$1.18 - $1.20 bil||$337 mil||$845 - $865 mil|
|Tax rate||38.6% - 39.0%||38.6% - 39.0%||38.6%||38.6% - 39.0%|
|Diluted shares outstanding||188 mil||188 mil||187 mil||188 mil|
|Diluted EPS||$2.83 - $2.87||$2.83 - $2.87||$0.78||$2.05 - $2.09|
|YOY % change||12% - 14%*||12% - 14%*||20%||10% - 12%*|
|Capital expenditures||$565 - $615 mil||$565 - $615 mil||$155 mil||$410 - $460 mil|
|*On a 52-week to 52-week basis:|
|Sales growth||12% - 14%||12% - 14%||14%||12% - 14%|
|Diluted EPS growth||14% - 16%||14% - 16%||20%||13% - 15%|
The following table provides information about the Company's estimated store openings through fiscal year 2014.
|Estimated Openings||Relocations||Average Square Feet per Store||Ending Square Footage Growth|
|Fiscal year 2013||32 - 34||5||34,000||8%|
|Fiscal year 2014||33 - 38||2 - 3||38,000||8% - 9%|
Over the long term, the Company considers 1,000 stores to be a reasonable indication of its market opportunity in the United States as the Whole Foods Market brand continues to strengthen, consumer demand for natural and organic products continues to increase, and the Company's flexibility on new store size opens up additional market opportunities. The Company believes Canada and the United Kingdom hold great promise as well.
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