2 0 04 Annual Repor t
Our core values reflect the sense of collective fate among our stakeholders and are the soul of our
company. Our Team Memb...
more than 54% of Americans have tried organic foods and beverages and nearly one in 10 use organic products regularly or s...
Whole Foo d s Market Unive rsity (WFM-U )
    We are very excited about expanding our presence in
                        ...
We are Canadapleased to announce that for the eighthWholein a row our Team Members have )ranked
ence in very and extending...
At 59,000 square feet, our Columbus Circle store in the Time Warner Center is the largest food store
    in Manhattan. It ...
AUGUST 3, 2 0 04 – We received top “Gourmet Market” and “Health and Natural Foods”

                                      ...
2004 Global All*Stars
     Whole Foods Market recognizes excellence in leadership throughout the company with our Global
 ...
Terry Layton         Joel Leonard              Mike Litka             Jennifer McFarlin       Adam Mitchel            Alan...
Our motto—Whole Foods, Whole People, Whole Planet™—emphasizes that our vision reaches far
    beyond just food retailing. ...
Trading Information
                                                                                            The common...
Whole Foods Market, Inc.
550 Bowie Street
Austin, Texas 78703
www.wholefoodsmarket.com
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  1. 1. 2 0 04 Annual Repor t
  2. 2. Our core values reflect the sense of collective fate among our stakeholders and are the soul of our company. Our Team Members, customers, shareholders, vendors, community and environment must flourish together through their affiliation with us or we are not succeeding as a business. It is leadership’s role to balance the needs and desires of all of our stakeholders and increase the productivity of Whole Foods Market. By growing the collective pie, we create larger slices for all of our stakeholders. Our Core Values: Selling the Highest Quality Natural and Organic Products Available Satisfying and Delighting Our Customers Team Member Happiness and Excellence Creating Wealth Through Profits and Growth Caring About Our Communities and Our Environment
  3. 3. more than 54% of Americans have tried organic foods and beverages and nearly one in 10 use organic products regularly or several times per week. Of those Americans buying organic products, 58% believe the products are better for the environment, 54% believe they are better for their health, 42% believe they O C TO B E R 21, 2 0 04 – Organic food sales grew 20% to $10 billion last year. According to our 2004 Whole Foods Market Organic Foods Trend Tracker™ survey, Financial Highlights 2004 2003 2002 2001 2000 $ 3,864,950 $ 3,148,593 $ 2,690,475 sales (000s) $ 2,272,231 $ 1,838,630 $ 216,646 $ 167,379 $ 140,985 $ 104,459 $ operating income (000s) 94,643 $ 1.98 $ 1.58 $ 1.32 $ $ diluted eps from continuing operations 0.84 0.46 163 145 135 126 117 number of stores at end of fiscal year $ 482,000 $ 424,000 $ 393,000 average weekly sales per store $ 353,000 $ 325,000 8.6% 10.0% comparable store sales increase 14.9% 9.2% 8.6% 2004 was the best year in our 24-year history. Dear Fellow Stakeholders: I want to appreciate all of our Team Members for their ditures, of which $155 million was for new stores, as well continued hard work and dedication and all of our customers as $28 million paid to shareholders in quarterly cash div- are better quality and 32% believe they taste better. and shareholders for their continued support. In a year that idends that we initiated at the beginning of the year. We was challenging for most food retailers, we grew sales 23% were very pleased to have the confidence in our financial to just under $4 billion. Our 14.9% comparable store sales position to increase that quarterly dividend 27% to $0.19 increase set a new company record. We had strong sales per share at year end. every quarter and across all regions, all departments, and Our industry-leading performance and strong balance all age classes of stores. Even our stores over eight years of sheet position led to our corporate credit rating being raised age produced double-digit sales increases. Eighty-four percent to investment grade by both Moody’s Investors Service and of all stores set weekly sales records and our sales per S&P Ratings Services and to a sharp 59% increase in our gross square foot were $786, up from $716 last year. stock price during the fiscal year. Our net profit margin for the year improved 25 basis Last year I spoke of three goals that were created during points to 3.4% of sales, we produced a 21% increase in our 2003 Future Search process which stood out for us as diluted earnings per share to $1.98, well ahead of our initial major priorities in 2004. We made significant progress dur- guidance of $1.87 to $1.95, and we reported four consec- ing the year toward each of these goals. utive quarters of positive EVA resulting in record EVA improve- MM ment of $12.6 million. G lo b al E x pan si o n During the year, we opened our second store in Canada and We earned $330 million in cash from operations which 10 acquired six Fresh & Wild stores in the United Kingdom. allowed us to self fund our $265 million in capital expen- $
  4. 4. Whole Foo d s Market Unive rsity (WFM-U ) We are very excited about expanding our presence in As we continue to expand, maintaining our Team Members’ Canada and extending our company mission and the Whole passion for our Mission and Core Values is an essential Foods Market brand beyond North America and into Europe. ingredient in setting us apart from our competitors. Cindy The U.K. was an obvious choice due to the advanced Bradley, formerly our VP of Team Member Services, was acceptance of organics and the lack of language barriers selected as our new VP of Learning at WFM-U. The vision for there. We felt an acquisition was the right strategy for our WFM-U is to create online, self-paced learning modules that first overseas venture because, as with other successful will engage our Team Members in active education and devel- acquisitions we have made, the infrastructure and intel- opment. The “U-Learn Network” was launched this year and lectual capital we gained provided us with an immediate several modules, made up of learning vignettes, are already platform for expansion. We are actively exploring real estate accessible. In the future, we hope to create product-related opportunities in the London area with the goal of signing training materials that will be accessible to both Team a lease for a large format Whole Foods Market store in the Members and customers, thereby creating an in-store learn- very near future. ing environment that will become an important part of the Whole Foods Market shopping and work experience. A n i mal Com pas s i o n Stan dard s We decided the existing paradigm for animal production “Building on the strength of 2004, I’m looking should change and that we now have the scale and scope forward to an even brighter 2005!” to make a difference. Last year we began a rigorous process The question I am asked most often is “how many Whole of creating enhanced farm animal treatment standards Foods stores can there be?” I don’t answer that question beyond the strict animal welfare we already required. These anymore because I have always been wrong in the past, enhanced standards are being developed jointly by Whole thankfully on the low side. We certainly are not limited by Foods Market, animal welfare advocacy groups and various opportunity as demographically the world continues to move farmers and ranchers that we do business with, and focus in our direction with an overall aging of the population and on providing environments that best support the animals’ a growing interest in health, well-being and longevity. Our natural physical needs, behavior and well being. This year we 2004 class of new stores was our best yet, with the 12 new created standards for several species but hope to complete stores (six of which were in new markets) averaging $575,000 standards for every species we sell over the next three years. in weekly sales for the year. We believe the fact that our new We also created an Animal Compassion Foundation which stores are successful in markets as diverse as New York will provide education and research services to assist and City and Charleston, South Carolina, speaks to the broad inspire ranchers and meat producers around the world to appeal of our stores and the growing awareness of our brand. achieve a higher standard of animal welfare excellence while And, while I am not ready today to say our comparable store still maintaining economic viability. Please check our web- sales have broken out of their historical 8% to 9% range, site for additional information about our welfare standards we certainly have seen accelerating trends over the last ten and the Animal Compassion Foundation. Where Does the Money Go? Growth Since IPO 9/26 /04 9/29/91* cagr 63.1% 163 11 24% number of stores Cost of Goods $3.9 b $92.5 m sales 33% Sold/Occupancy $1.98 $0.17 21% earnings per share 24.2% 32,100 1,100 30% Salaries/Benefits team members 9.2% $84.73 $4.25 stock price 27% Income Taxes/ *1991 results do not include the impact Other Expenses of subsequent pooling transactions. 3.4% Stock price is split-adjusted IPO price in January 1992. Net Income 2
  5. 5. We are Canadapleased to announce that for the eighthWholein a row our Team Members have )ranked ence in very and extending our company mission and year Foo d s Market Unive rsity (WFM-U us as one Foods Market brand beyond“100 Best Companies we continueFor.” In determiningour Team Members’ the Whole of Fortune magazine’s North America and As to Work to expand, maintaining who makes the list, Europe. The U.K. was company benefits and practices but for our Mission and Core Values is an essential into Fortune evaluates an obvious choice due to the passion places the greatest weight on responses from a random survey of employees. Withlanguage ingredient in setting us apart fromwhich approximately advanced acceptance of organics and the lack of more than 32,000 Team Members, of our competitors. Cindy 84% are full-time, we an acquisition was the right strat- Bradley,make the our VP of moved up 17 places from barriers there, and we felt are the only national food retailer to formerly list. We Team Member Services, was last for our first overseas this year, our highest placement on the list so far, of Learning at WFM-U. The vision for egy year to number 30 venture because, as with other selected as our new VP and of the 37 large companies listed, we acquisitions we fifth. made, the infrastructure WFM-U is to create online,Fame list learningcompanies successful were ranked have We were also recognized in the new Hall of self-paced of 22 modules that thatintellectual capital we gained“100 Best”with an imme- inception our1998.Members in active education and devel- have appeared on the provided us list since its will engage in Team and opment. The “U-Learn Network” was launched this year diate platform for expansion. We are actively exploring real and several modules — made up of learning vignettes — estate opportunities in the London area with the goal of are already accessible. In the future, we hope to create signing a lease for a large format Whole Foods Market store product-related training materials that will be accessible in the very near future. to both Team Members and customers, thereby creating an in-store learning environment that will become an impor- A n i mal Com pas s i o n ate Stan da rd s tant part of the Whole Foods Market shopping and work We decided the paradigm for animal production must experience. change and that we have the scale and scope to make a difference so last year we began a rigorous process of creat- “Building on the strength of 2004, I’m looking for- ing enhanced farm animal treatment standards beyond the ward to an even brighter 2005!” strict animal welfare we already required. These enhanced standards are being developed jointly by Whole Foods The question I am asked most often is “how many Whole Market and animal welfare advocacy groups and focus on Foods stores can there be?” I don’t answer that question providing environments that best support the animals’ anymore because I have always been wrong in the past, natural physical needs, behavior and well being. This year thankfully on the low side. We certainly are not limited by we created standards for several species but hope to com- opportunity as demographically the world continues to plete standards for every species we sell over the next three move in our direction with an overall aging of the popu- years. We also created an Animal Compassion Foundation lation and a growing interest in health, well being and which will provide education and research services to assist longevity. Our 2004 class of new stores was our best yet, and inspire ranchers and meat producers around the world with the 12 new stores (six of which were in new markets) to achieve a higher standard of animal welfare excellence averaging $575,000 in weekly sales for the year. We believe while still maintaining economic viability. Please check our the fact that our new stores are successful in markets as website for additional information about our animal wel- diverse as New York City and Charleston, South Carolina, fare standards and Animal Compassion Foundation. EPA O C TO B E R 5, 2 0 04 – The Environmental Protection Agency (EPA) recognized us for our green power purchases with a 2004 Green Power Leadership Award. We currently purchase or generate more than 20% of our total national power from green power sources each year. 3
  6. 6. At 59,000 square feet, our Columbus Circle store in the Time Warner Center is the largest food store in Manhattan. It is a true foodie paradise offering culinary treasures from the finest authentic artisans and renowned purveyors of produce, meat, seafood, cheese, coffee, and baked goods that are free of hydrogenated oils, artificial additives, preservatives, and sweeteners. Some of the store’s unique offer- ings include: a 248-seat café where shoppers can enjoy our restaurant-quality prepared foods; a full service Sushi Bar featuring fresh-cut sushi wrapped in organic seaweed; a walk-in Greenhouse show- casing fresh cut and exotic flowers; a Wine Shop serving more than 700 varieties of wine; and a Chocolate Enrobing Station where customers can request just about anything to be covered in chocolate. 4
  7. 7. AUGUST 3, 2 0 04 – We received top “Gourmet Market” and “Health and Natural Foods” Manhattan-based locations. New Yorkers rave about the unprecedented amenities rating in the Zagat Survey 2005 NYC Gourmet Marketplace Guide for our two years, and most dramatically over the last year which top priority for us. One of our secrets is what I refer to as seems to indicate we are still significantly under-stored. our “yogurt culture.” For example, in our Columbus Circle Our goal is to produce 15% weighted average square store, about 25% of the Team Members transferred from footage growth in fiscal 2005 and beyond. We have suffi- existing stores. They were the starting culture that launched cient capital available to meet this goal, and over the last the fermentation that turned Columbus Circle into a true five quarters, we have announced seven or more newly Whole Foods store. I will always remember when we opened signed leases creating a pipeline of 53 stores covering 21 our second store back in 1982, and Team Members told me states, Ontario, Canada, and the United Kingdom. These they feared we would get way too corporate and lose what stores average 49,000 gross square feet, a 53% increase made us special. But we have proven that it doesn’t matter over our existing average store size of 32,000 gross square how large we get as long we stay true to our core values and food offerings. feet. Our pipeline totals a record 2.6 million square feet, and continue to maintain and attract Team Members who a 63% increase in square footage under development over share our passion. Our motto — Whole Foods, Whole People, Whole Planet™ last year, and represents 50% of our existing square footage. Our biggest challenges in 2005 center around meet- — emphasizes that our vision reaches far beyond just food 1 ing our higher square footage growth goals while delivering retailing. We are focused on selling the highest quality strong results in light of the difficult comparisons we are natural and organic foods in the world and helping evolve facing, particularly in the first half of the year. Despite 2004 a better person, company and world through our dedica- NYC being our best year ever, we still expect sales growth of 15% tion to our core values, stringent quality standards and to 20% and comparable store sales growth of 8% to 10% principles of right livelihood, Team Member empowerment, in 2005. Due primarily to significantly higher pre-opening community service, conscientious retailing and sustain- expenses, it is likely our EPS growth will be lower than our able agriculture. sales growth. In addition, new stores could have some We look forward to sharing and extending our vision negative impact on store contribution, as new stores gen- with the rest of the world as we open bigger and better erally have lower gross margins and higher direct store new stores at an accelerated rate in the years ahead, as expenses than more mature stores. the brand awareness of Whole Foods Market continues to The changes we made to our executive team and to increase, and as we progress toward our goal of $10 billion our operating structure will better position us for the in sales by the year 2010. accelerated growth ahead. I transferred the title of Presi- dent to Walter Robb and A.C. Gallo, and we promoted Lee With warmest regards, Valkenaar to the new position of Executive Vice President of Global Support. We also expanded our number of oper- ating regions from eight to ten for better regional support John Mackey of our existing store base as well as for our anticipated Chairman of the B oard future growth in those areas. Chie f E xe c utive O ffic e r Even as we have grown at a rapid pace, hiring thou- sands of new Team Members each year, we have managed to spread and perpetuate our culture and this remains a 5
  8. 8. 2004 Global All*Stars Whole Foods Market recognizes excellence in leadership throughout the company with our Global All*Star awards. With more than 32,000 Team Members in over 200 stores, facilities and offices across the company, being recognized as a Global All*Star is a true achievement. We honor these 48 individuals who have set incredibly high standards and have achieved truly outstanding results over the course of the past year. Rolando Alas Tee Ayer Michael Besancon Julie Birdsong Cindy Bradley Patrick Bradley Produce Team Leader, Store Team Leader, President, Southern Project Leader, Vice President of President, Midwest Mill Valley Galleria Pacific Region Central Support Learning/WFM-U Region Tana Bronk Sean Byrne Steve Campbell Janet Chaykin Barbara Coffman Laura Derba Whole Body Team Meat Team Leader, Store Team Leader, Bakery Coordinator, Whole Body Team Store Team Leader, Member, Madison Pasadena Campbell Southwest Region Leader, Durham University Heights Christopher Phillips- Omar Gaye Gary Giles Anthony Gilmore Stephen Goldberg Robin Graf Frishman Store Team Leader, Seafood Team Leader, President, Northern Prepared Foods Team Member Serv- Store Team Leader, Alpharetta Pearl California Region Director, North ices Director, South- West Bloomfield Hills Atlantic Region ern Pacific Region Forrest Hoffmaster Don Hosfeld Bill Jordan George Khoury Paula Labian Roberta Lang Director of Grocery Team Leader, Vice President, Vice President, Vice President of Team Vice President, Operational Finance, Ft. Lauderdale Southern Pacific Region Southern Pacific Region Member Services General Counsel Mid-Atlantic Region 6
  9. 9. Terry Layton Joel Leonard Mike Litka Jennifer McFarlin Adam Mitchel Alanya Nelson Whole Body Team Prepared Foods Team Store Team Leader, Payroll Benefit Store Team Leader, In Store Educator, Leader, Walnut Leader, Fresh Pond Marlton Specialist, Madison Madison Madison Creek Chris Pine John Robertson Joe Rogoff Gerre Scherz David Schwartz John Simrell Vice President Store Team Leader, Vice President, Store Team Leader, Vice President, Director of Finance, of Real Estate Charlottesville Northern California Wilcrest Midwest Region South Region Region Kel-e Sherman Dodi Steiniger Ron Stockman Rocco Terrazano Jeff Teter Michael Thompson Team Member Director of Whole Body Meat Team Leader, President & General Store Receiver, Services Director, Operational Finance, Coordinator, Florida Yorkville Manager, Allegro Madison Midwest Region Southern Pacific Region Region Coffee Company Robert Thompson Julianne Ugo Bobby Turner Theo Weening Felicia Williams Mark Wilson Store Team Leader, Team Member Services Bakery Coordinator, Meat Category Customer Service Team Produce Coordinator, Thousand Oaks Coordinator, Northern Midwest Region Manager, Mid-Atlantic Leader, Rose City Southern Pacific Pacific Region Region Region 7
  10. 10. Our motto—Whole Foods, Whole People, Whole Planet™—emphasizes that our vision reaches far beyond just food retailing. Through our new Animal Compassion Foundation, we will provide edu- cation and research services to assist and inspire ranchers and meat producers around the world to achieve a higher standard of animal welfare excellence while still maintaining economic viability. We believe the existing paradigm for animal production should change, and we now have the scale and scope to make a difference. Just as we played an important role in the creation of organic standards, we will work to raise the bar in treating farm animals with more compassion, and we hope other retail- ers and animal producers will follow our lead. 8
  11. 11. Trading Information The common stock of Whole Foods Market is traded on the Nasdaq Stock Market (symbol: WFMI). If you wish to become Corporate and Shareholder Information a shareholder, please contact a stockbroker. Dividend Policy In November 2003, the Board of Directors declared a quarterly dividend of $0.15 per share, or Whole Foods Market $37 million, to shareholders in Leadership Team four quarterly dividends during the fiscal year. In November Anthony Gilmore Ron Megahan Scott Allshouse 2004, the Board of Directors President President President approved a 27% increase in the Northern California Region Pacific Northwest Region South Region quarterly dividend to $0.19 per Marc Jonna Ken Meyer Michael Besancon share. The first $0.19 per share National Wine Buyer President President quarterly dividend was payable in Mid-Atlantic Region Southern Pacific Region January 2005, and the Company Paula Labian expects to pay approximately $48 Vice President Juan Nunez Cindy Bradley million in dividend payments to Team Member Services President Vice President of Learning shareholders in fiscal year 2005. Florida Region Edmund LaMacchia Patrick Bradley National Produce Coordinator Will Paradise President Ordering Financial Statements President Midwest Region A copy of our Annual Report or Roberta Lang Rocky Mountain Region Form 10-K may be obtained by Vice President Mike Clifford written or phone request to: General Counsel Walter Robb Vice President Co-President Chief Information Officer David Lannon Shareholder Services Chief Operating Officer President Mark Dixon Whole Foods Market, Inc. North Atlantic Region Jim Sud President 550 Bowie Street Executive Vice President Southwest Region Austin, Texas 78703 Cindy McCann Growth and Business 512.477.5566 ext. 20801 Vice President Glenda Flanagan Development Investor Relations Executive Vice President Annual Meeting Lee Valkenaar Chief Financial Officer John Mackey Executive Vice President April 4, 2005 Chairman of the Board Betsy Foster Global Support 9:00 a.m. (EDT) Chief Executive Officer Vice President New York Marriott Margaret Wittenberg Purchasing and Distribution Lee Matecko East Side Hotel Vice President Vice President A.C. Gallo 525 Lexington Avenue Marketing and Public Affairs Operational Finance Co-President New York, New York 10017 Chief Operating Officer Transfer Agent & Registrar Information about stock certifi- Board of Directors cates, change of address, owner- ship transfer or other stock David W. Dupree Gabrielle E. Greene Morris J. Siegel matters can be obtained from: Managing Director Chief Financial Officer, Former Vice Chairman The Halifax Group Villanueva Companies of the Board, The Hain Securities Transfer Corporation Celestial Group, Inc. Dr. John B. Elstrott John Mackey 2591 Dallas Parkway, Suite 102 Director Chairman of the Board and Dr. Ralph Z. Sorenson Frisco, Texas 75034 Levy-Rosenblum Institute Chief Executive Officer Managing Partner, 469.633.0101 for Entrepreneurship, Whole Foods Market, Inc. Sorenson Limited Partnership www.stctransfer.com Tulane University’s Freeman Linda A. Mason School of Business Independent Auditors Chairman of the Board, Ernst & Young LLP Avram J. Goldberg Bright Horizons Family Austin, Texas Chairman of the Board Solutions AVCAR Group, Ltd. Visit our web site www.wholefoodsmarket.com
  12. 12. Whole Foods Market, Inc. 550 Bowie Street Austin, Texas 78703 www.wholefoodsmarket.com

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