The Austin-based company, with 140 stores and revenues of $2.7 billion in its 2003 fiscal year, is the largest retailer of natural and organic foods. It opened five stores in its first fiscal quarter, ending Jan. 19; has opened two more in the current quarter; and has signed leases for seven more stores.

On Wednesday, it reported another quarter of strong growth. Profit rose 27% to $25.6 million in the first quarter from $20.1 million in the previous first quarter. Revenues increased 18% to $924 million.

Wholes Foods is constantly seeking appropriate sites for new stores, Jim Sud, vice president of growth and business development, said Wednesday in a conference call with stock analysts. He said the company has been building its real estate operations to find properties and negotiate leases.

"We've taken great steps to improve our capacity, focusing on improving our broker networks, the number of VPs in real estate, beefed up research and added financial analysts," Sud said. "So we feel like we have a really strong team in place and we're really focused on making these leases happen."

Sud said Whole Foods usually has 20 to 25 sites under consideration and that another five to 15 sites are in the hands of its real estate committee. "It's a really tricky thing in how quickly you move in negotiating a lease," he said.

The company wants to move quickly to get new sites into its store pipeline, but it wants to make sure it's getting the right sites at the right price. "We're making 20-year decisions," Sud said. "And we don't want to be rushed to sign a lease at the expense of the quality and the terms of our deals." He said the current pipeline is strong, adding, " I expect our pipeline to continue to grow."

The size of Whole Foods stores is growing as well. The 23 stores in development average 42,000 sf, compared with the 36,000 sf average of stores in development a year ago. The company expects store size to increase 12% to 14% a year, including store expansions. Whole Foods executives previously thought they'd have to have 400 stores to reach $10 billion in sales, but the bigger stores will allow them to do it with 300.

Instant Insights /

Whole Foods Working 1M-SF Pipeline

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