First quarter profits at natural and organic food retailer Wild Oats Markets reached $668,000 (€729,332) on sales of $233.0 million, up 6.2 per cent compared to the previous year. In the first quarter of 2001, the company posted losses of $118,000, and this was the first quarter since Q3 2000 that the company remained in the black.
The company said its gain in sales was driven by a 7.3 per cent rise in like-for-like store sales compared with the same quarter a year earlier. Wild Oats has now recorded five successive quarters of comparable sales growth.
The continued improvement in same-store sales is primarily due to positive results from the company's Fresh Look marketing and merchandising programme, which has helped to increase overall sales, customer traffic and basket size in the 42 Wild Oats Natural Marketplace stores that have implemented the programme, the company said in a statement. Operational improvements in the Company's remaining Wild Oats natural food supermarket format stores and continued strong sales in the Henry's Marketplace and Sun Harvest farmers market stores also contributed to the improvement.
The return to profitability was driven by overall operational improvements that resulted in improved store contribution margins and reduced direct store expenses, the company said.
"We are pleased with the progress we have made this quarter. We believe that our strategies to improve sales and strengthen our operations are working, and have netted positive results earlier than originally expected," said Perry D. Odak, president and chief executive officer. "In addition to continued growth in comparable store sales and a return to profitability in the quarter, we have significantly reduced our inventories and improved our cash position. This has allowed us to reduce our debt in the quarter and, with continued strong balance sheet management, will help to fund our growth initiatives into the future."
Odak said that the Wild Oats stores which were participating in the Fresh Look programme had shown mid single-digit growth during the first quarter on a like-for-like basis, and that the average transaction size in these stores had increased in the first quarter both sequentially and year-on-year.
The goal of the Fresh Look programme is to drive overall awareness of Wild Oats among a broader cross section of customers, and to increase customer traffic in the stores through more frequent and more comprehensive advertising and pricing promotions, Odak said. He confirmed that the success of the programme meant that a number of other outlets would take part in the scheme from the second quarter of the year.
The first quarter also saw the sale or closure of five Wild Oats stores which did not meet the company's strategic objectives. A new outlet was unveiled last month in Long Beach, California, which will serve as a prototype for all future Wild Oats stores. It features an expanded produce section and a store-within-a-store which sells supplements, natural body care products and homeopathic remedies. Two new Wild Oats Natural Marketplaces and one new Henry's Marketplace based on the new format are expected to open by early 2003.
The company is continuing to look for new sources of financing for its aggressive store expansion programme, and said it had received a number of offers to invest in the company. Wild Oats plans to open up to 10 additional stores in 2003, 20 in 2004 and 25 in 2005.
"The momentum we established in 2001 has continued into the new year," said Odak. "We had a positive quarter in terms of financial results, operational improvements, the completion of our new store prototype and we opened our Long Beach location in the early part of the second quarter. We expect continued positive results during the remainder of the year. For the full year, we expect to generate comparable store sales that are slightly above fourth quarter 2001 levels, and continued improvement in our profitability."