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Whole Foods Market recently reported its full-year results, noting that sales increased 23% to USD3.9 billion and net income increased 32% to USD137.1 million. "Our fourth quarter results cap off an outstanding year," said John Mackey, chairman and CEO of WFM. "In a year that has proven to be very challenging for most food retailers…our 14.9% comparable store sales increase set a new company record."

In the fourth quarter, the company opened three new stores in Princeton, NJ; Valencia, CA; and West Vancouver, BC, ending the year with 163 stores in the USA, Canada and the UK, totaling approximately 475,000 square metres. WFM has opened one store in Hingham, MA and expects to open two additional stores in Redwood City, CA and Sarasota, FL in the first quarter of fiscal year 2005. The company noted that it has 53 new stores in the development pipeline.

WFM has stated a long-term growth goal of USD10 billion in sales by the year 2010. For fiscal year 2005, the company still expects sales growth of 15% to 20% and comparable store sales growth of 8% to 10%. The year is expected to see the opening of 15 to 18 new stores, including three relocations. Capital expenditures are expected to be in the range of USD300 million to USD320 million.

WFM continues its run as being one of the strongest performers in the US grocery sector in terms of comparable sales growth (it is second only to Californian grocer Stater Bros, which picked up all sorts of extra business as a result of the SoCal labour dispute). Its growth in the US looks assured for the coming few years with store numbers set to increase by a third over the medium term and consumer trends continuing to favour products ranges such as organics.

In Canada, growth opportunities will be slightly more limited thanks to fierce competition for new store sites, although the group is reportedly evaluating potential further locations in Vancouver and Toronto as well as exploring options for new markets such as Montreal, Ottawa, Oakville, Barrie and London. Up against companies like Loblaw, which has made great strides in its provision of organic lines through its President's Choice private label range, WFM will arguably find the Canadian market less hospitable than the US sector, although such is the quality of its offer, it should not struggle too much.

In the UK, there are mixed messages facing WFM as it seeks to introduce its WFM superstore format to the British market and use it as a springboard for expansion into the rest of Europe. On one hand, it should be able to capitalize on extremely favourable market conditions. Trade body The Soil Association last month reported that sales of organic food have grown by more than 10% in the past year, with retail sales of organic food now worth GBP1.12 billion and growing by GBP2 million a week - a rate of growth that is twice the rate of the general grocery market. On the other hand, it will face stern competition from businesses like Tesco, Sainsbury's, M&S and Waitrose who have all assembled comprehensive and keenly priced organic ranges.

Furthermore, these retailers are all space-hungry in a restrictive planning environment in which large-store sites are in extremely short supply. A similar situation awaits WFM in markets like France and The Netherlands, which have also been touted as potential markets of entry for WFM. So, while there can be no doubt that WFM is a business playing at the top of its game, international expansion might be a good deal slower than the company has been used to at home.
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