In the company’s second quarter conference call May 2, chief executive officer John Mackey said one of the keys to the company’s continued sales growth is to improve its value positioning and to consistently have an annual gross margin within the company’s historical 34% to 35% range.
“While we are very proud to have produced record margin results this quarter, our longer-term strategy has not changed, and while we have confidence that we can continue to deliver excellent results, we do not consider margins over 35% to be sustainable,” Mackey said during the call.
The company reported record results in the second quarter in several areas:
- Average weekly sales per store were $697,000, or $971 per square foot;
- Gross margins were 36.3%
- Store contributions were 10.8%
- Operating margins were 7.1%
- Earnings before interest were 9.7%
- Returns on invested capital were 16.3%.
Mackey said the company remains on track to open up to 27 new stores in 2012 and up to 32 new stores in 2013, with 70 new stores in development.
“We see great opportunities on the real estate front and are focused on continuing to build our new store pipeline,” Mackey said. “Our broader real estate strategy is bearing fruit as evidenced by the improving performance of new stores.”