Healthy eaters boost Whole Foods earnings

Whole Foods Market Inc., the largest U.S. natural-goods grocer, surged the most in more than three months after raising its annual forecasts, buoyed by freer- spending consumers prepared to pay for healthy food.

Earnings will be as much as $1.80 a share in 2011, the company reported. That compared with a previous target of as much as $1.71. The Austin, Texas-based grocer also raised its sales growth forecasts for the year, citing increasing consumer confidence.

Shoppers are putting more items in their baskets and paying more per item, Co-Chief Executive Officer Walter Robb said. Whole Foods also has wooed customers away from traditional supermarkets as people seek out healthier fare for themselves and their children amid rising obesity rates in the U.S.

“Their turnaround is more than a result of just simply rich people spending more,” said Neil Currie, an analyst at UBS Securities in Stamford, Connecticut. “They’ve recaptured that customer who is still in cost-saving mode by refocusing on their heritage, which is healthy eating and natural foods.” Currie rates the shares “neutral.”

The company’s “Health Starts Here” program encourages shoppers to stock up on unprocessed foods, healthy fats and nutrient-dense items. Some stores have a nutritionist on staff to answer questions.

“They’re winning a lot of share based on this wellness initiative,” said Scott Mushkin, an analyst at Jefferies & Co. in New York. “The mom who is newly pregnant is saying, ‘my baby is worth it.’”