The case can be made that John Mackey deserves a raise. The vegan-capitalist-co-founder of Whole Foods Market, who in 2007 voluntarily cut his salary to $1 and elected to forgo any future bonuses or stock option awards, saw sales at the natural-food chain he helped create over 30 years ago top $10 billion in 2011 (up more than 12% vs. the previous year).
Investors rewarded Whole Foods’ performance by driving the stock up 37% in 2011, making it the grocery industry’s top performer. Of course, as the company’s largest individual shareholder with more than 1 million shares of Whole Foods’ stock, 58-year-old Mackey doesn’t need a raise. By comparison, Walter Robb, with whom Mackey has shared the co-CEO title since 2010, earned about $4.5 million in salary and bonus that year vs. about $46,000 in total compensation for Mackey. (Compensation amounts for fiscal 2011 will be available later this month when Whole Foods files its 2011 proxy statement.) Mackey and Robb share the credit for having guided Whole Foods back to post-recession profitability.
Whole Foods Market’s stellar performance last year was buoyed by strong demand by its affluent clientele and a marked improvement in its value image. (Sales at Whole Foods stores open at least a year rose 8.5% in fiscal 2011, the best comparison in five years.) Like high-end retailers in other industries (think Nordstrom), Whole Foods is benefitting from increased spending by high-income shoppers, its target demographic.
While mid-tier supermarket chains, such as SUPERVALU, Safeway, and The Fresh Market, continue to struggle with soft consumer spending, Whole Foods shoppers are spending like the recession never happened. Well almost. The chain has worked hard to shed the “Whole Paycheck” moniker by pushing its own brands and through the use of coupons and special price promotions. It’s being rewarded for its efforts.
With more than 310 stores in the US, Canada, and the UK, Whole Foods sees plenty of opportunity to reach its long-term goal of 1,000 US stores. Flexibility in new-store size has opened up smaller markets, including Detroit, for development. Indeed, Whole Foods expects to open a record number of new stores in fiscal 2012 (between 24 and 27) and fiscal 2013 (between 27 and 32).
This year, Whole Foods is forecasting sales growth between 13% and 15%. With numbers like that, $20 billion in sales isn’t far off.