Whole Foods (WFM) on Wednesday reported a quarterly profit that topped Wall Street expectations, and shares of the organic and natural grocery chain rose sharply higher in extended trading.
As traditional supermarkets and big-box retailers muscle into the organic category, Whole Foods' sales growth has slowed, and it has been fighting to better define what sets it apart.
That has meant trying to stay ahead of trends, such as giving customers more information about where its products come from. Last month, for instance, it introduced a ranking system that labels produce as "good," ''better" or "best" based on the supplier's farming practices. It plans to label all products that have genetically modified ingredients by 2018.
"Natural and organic products are increasingly available, yet no one offers the shopping experience we offer," said Walter Robb, co-chief executive officer of Whole Foods, in a statement. "We hold the idea of 'food' to a higher standard, banning more than 75 ingredients commonly found in other stores, and we believe our unparalleled quality standards are a large part of why we maintain a broad base of loyal customers and attract new customers aspiring to a natural and organic lifestyle."
Whole Foods also recently began offering one-hour delivery in 15 major markets and is installing community spaces at some locations, including an outdoor putting green at its store in the golf-centric community of Augusta, Ga.
Additionally, the grocer is trying to appeal to a broader audience by shaking its "Whole Paycheck" image. To bring down its prices, the company has been pushing its store brands, such as its 365 Everyday Value line.
Whole Foods, which has 400 locations, said it sees potential for 1,200 locations in the U.S. over the long term.
Whole Foods Market earned $128 million, or 35 cents per share, for the most recent quarter. That tops the 32 cents per share analysts expected, according to FactSet. A year ago, it earned $121 million, or 32 cents per share.
Revenue rose 9.4 percent to $3.26 billion, in line with Wall Street expectations.
The company said sales rose 3.1 percent at established locations during its fiscal fourth quarter, which ran through Sept. 28. Looking ahead to its next fiscal year, it said it expects the figure to rise in the low- to mid-single digits.
Whole Foods also hiked its dividend by a penny to 13 cents.
Shares of the Austin, Texas-based company rose 7.3 percent to $42.91 in aftermarket trading.