Whole Foods FY 1Q15 Earnings Call Notes

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Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

Online delivery sales are as high as 5% of total in some stores

“With online delivery sales as high as 5% of total sales in some of our stores, we’re very excited about the future potential as we expand our reach to more markets, provide richer content highlighting our quality standard and broaden our product offering.’

Apple pay is 2% of sales now

“With, the largest Apple Pay retailer in terms of both transactions and sales, further reinforcing the notion that our customer base wants to take advantage of the latest digital technologies. This payment option has grown quickly to 2% of sales which we expect will continue to increase especially after the Apple Watch launches this year.”

Taking out cost requires study and hard work

“it just requires a lot of hard work, I mean, obviously if we knew exactly the big areas to cut we’d already have done that. So, it’s about working on it, studying it, making it our priority which is what our regional presidents were doing and our executive vice presidents for operations. We’re very cautious of the fact that we need to take cost out of our system. And we’ve done it in the past, and we’re going to continue to do it going forward.”

We could move a lot faster as a private company

“e’re a public company. So we’ve got to juggle a lot of things, meaning that we, I mean, suppose if Whole Foods was a private company, we would act a lot faster. But it’s been our experience that market often times overreacts to anything we do.”

We’re still small in the overall market in most of our markets

“One thing to understand is that in only few of our markets, just Whole Foods Market have like the leading market share for food, in supermarkets or food retailing. I mean, in almost all of our markets but maybe a few, we are, our market share is relatively low.

We’re not, I mean, we, the point of it is, is we’re not a big threat to a major supermarket who dominates the market. It doesn’t make, in most cases, it doesn’t make much economic sense for them to go overreact and lower all their produce prices to try to match Whole Foods Market because they’re destroying our profitability or harming our profitability for very little market share gains.”

We’ve always been about quality not being the lowest priced

“Whole Foods is about quality, it’s about service, it’s about selection, it’s about ambience. We’ve never been and we never will be trying to be the lowest priced supermarket that’s sort of not very attractive, doesn’t give very good service. That’s not what we’re about. I mean that’s a valid niche in the marketplace just to be at a low priced, low-cost operator. But that’s not Whole Foods’ strategy. Our strategy has always been about the quality and the service and the selection.”

Competition is good

“And yes, I mean, competition is harder today than it used to be, but on the other hand, Whole Foods is a lot better today than it used to be. In fact, competition, it is your ally. It’s your ally that helps you to get better. It knocks you out of your complacency. It keeps you from being lazy, it forces you to evolve.”

People think we’re just going to sit still

“I think that’s something people have never understood about Whole Foods Market. They think we’re going to sit still and let people catch us. But we’re not going to sit still. We’re going to rapidly innovate and improve, that’s what we’ve done for over 35 years and that’s what we’re going to do going forward.”

We;re going to be relevant on price

“Yes, and I guess Scott, just to add to that Scott. We’re going to be relevant on price. We said that before, we say it again. Our tracking of competitor’s pricing and indexes is much more sophisticated now than it was two or three years ago. We know where we stand relative to the others.”