"We have successfully emerged from this recession with a healthier balance sheet and better capital disciplines..."
So said Whole Foods CEO John Mackey in a release announcing strong first quarter earnings for the upscale food retailer. How strong? Earnings rose to $0.39/share, just over double the rate seen a year ago and well ahead of the $0.33/share expected by analysts. The company beat on the top-line, too, with revenues of $2.11 billion -- up 11% from last year and better than the $2.05 billion expected. Most impressively, same store sales were up 8.7% in the quarter, with momentum growing to 9.5% through present quarter. The company raised same-store sales guidance for the year to between 6% and 7% (up from 3.5% to 5.5%).
The Whole Foods numbers may cast light on what some see as an emerging post-recession/new-normal theme: accelerating activity among high-end consumers (generally speaking, Whole Foods' demographic) and continued lethargy among lower-end consumers (think Wal-Mart still lowering prices).
A separate story that caught our eye last evening concerns a group of consumers that cannot be ignored, either: the peoples of emerging Asia. A post on The Financial Times website under the heading "Consumers in Asia Start to Open Their Wallets" notes that,
David Carbon, chief economist of DBS, south-east Asia’s biggest bank, says the increase in consumption is a long-term shift, driven by a surge in sustainable and self-generating domestic demand on the back of economic growth.
“Two big misconceptions about Asia’s recovery are that it has been driven by inventories [restocking by businesses] and that consumption continues to lag,” said Mr Carbon. “In fact, consumption has played the major role in Asia’s recovery, both directly and indirectly via its impact on inventories.”
The effect is most dramatic in China, where domestic demand increased by $180bn (€142bn, £122bn) in 2009, compared with about $90bn in the US, according to DBS estimates. The picture is similar in the rest of Asia, with private consumption in its 10 biggest nations, excluding Japan, more than 7 per cent above September 2008 levels.
“In sharp contrast to all the analysis claiming that Asia does not consume enough, it is buying up a storm,” said Mr Carbon.
The consumer is apparently not dead. At least not all of them.
