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Whole Foods Profit Rises 20% as Store Sales Improve

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May 8 (Bloomberg) -- Whole Foods Market Inc., the largest natural-goods grocer in the U.S., boosted its forecast for earnings this year after sales at established locations increased and second-quarter profit climbed 20 percent.

Net income rose to about $142 million, or 76 cents a share, from $118 million, or 64 cents, a year earlier, the Austin, Texas-based company said yesterday in a statement. Analysts projected 73 cents a share, the average of 24 estimates compiled by Bloomberg. The retailer also said it will split its shares two-for-one.

Whole Foods, which plans to triple its U.S. store count to about 1,000, has lured Americans who are becoming more concerned with eating organic and healthy foods. The 349-location grocer is expanding to smaller cities including Maple Grove, Minnesota, and Closter, New Jersey. Same-store sales rose 6.9 percent in the quarter.

Customer “traffic has been pretty decent,” Joe Feldman, a New York-based analyst at Telsey Advisory Group, said in an interview. “They’ve continued to do a good job with their merchandising -- there’s high demand for the product category, for the organic and natural.”

Whole Foods also reported a better-than-expected gross margin, he said.

Whole Foods rose 7.9 percent to $100.15 at 8:22 a.m. in New York. The shares gained 1.8 percent this year through the close of regular trading yesterday, while the Standard & Poor’s 500 Index climbed 14 percent.

The split will be for holders of record as of May 17 and occur on May 29.

Forecast Raised

Profit excluding certain items will be as much as $2.89 a share in fiscal 2013, up from a previous estimate of as much as $2.87. Analysts estimate $2.87 a share, on average.

Other natural-goods grocery stores are expanding, too. Fairway Group Holdings Inc., the supermarket that’s focused on opening locations in greater New York, last month raised $177.5 million in a U.S. initial public offering. Sprouts Farmers Market LLC, the 150-store grocery chain that’s owned by Apollo Global Management LLC, is considering a IPO, according to people familiar with the situation.

Whole Foods revenue rose 13 percent to $3.03 billion in the quarter, matching analysts’ average estimate. The company reiterated its forecast that revenue will increase as much as 11 percent this fiscal year.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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