Source: Whole Foods Market.

Investors have long seen Whole Foods Market (NASDAQ:WFM) as the pioneer in the organic and natural foods space, with the grocery chain having played a major role in driving consumer demand for higher-quality food, not just in supermarket retail, but throughout the food industry. After emerging from a long slump last quarter, Whole Foods still had to prove to its investors that its turnaround would result in more than just a single quarter's bounce, and coming into the company's fiscal first-quarter financial report Wednesday afternoon, shareholders were on edge about whether Whole Foods would indeed follow through.

Whole Foods once again delivered solid results for the quarter, building further momentum and suggesting that the grocery chain is on the right track for the long run. Let's take a closer look at Whole Foods Market's recovery, and what its quarterly results mean for the future.

Whole Foods Market serves up fresh earnings
Whole Foods kept its revenue and profits moving in the right direction during the quarter. Total sales climbed more than 10%, to $4.67 billion, matching what most of those following the stock had expected from the company. Net income rose 5.7%, to $167 million, and thanks to a substantial reduction in the number of shares outstanding, Whole Foods posted earnings of $0.46 per share, topping analysts' consensus figures by $0.01.

Whole Foods tapped all of its potential sources of growth. The company added nine new stores during the quarter, capping a year in which it boosted its overall square footage by 9.4%. At the same time, Whole Foods enjoyed accelerating comparable-store sales growth of 4.5%, which was almost half again faster than its 3.1% comps from the previous quarter. Even with a slight change in the way the company calculates comps, Whole Foods continued to gain speed coming into the 2015 calendar year.

Source: David Shankbone/Wikimedia Commons.

Whole Foods also continued to show discipline in investing its capital in high-return projects. Return on invested capital was a strong 14.8%, matching year-earlier levels. Even adjusting for its operating leases, Whole Foods still produced a solid 9.3% ROIC figure, although that was down two-tenths of a percentage point from last year's quarter.

Co-CEO Walter Robb trumpeted the success of the company, attributing "our broad-based sales momentum to our customers' positive response to our many strategic initiatives, along with improving consumer confidence." In particular, Robb stressed not only the community-enhancing nature of the chain's store locations but also the technological innovations that are changing the way people shop.

What will Whole Foods see in 2015?
Whole Foods has started the current quarter on a strong note, as well, with same-store sales continuing to accelerate, coming in at 4.9% for the first three weeks of the fiscal second quarter. The company has already opened three new stores, and it expects eight more to open during the remainder of the quarter.

Image by Robert Banh under Creative Commons license.

More broadly, Whole Foods maintained its expectations for growth throughout the 2015 fiscal year. That includes sales growth of more than 9%, comps in the low- to mid-single digits, and between 38 and 42 new store openings. Whole Foods also believes that its operating margins and returns on invested capital will remain near their current levels.

Yet Whole Foods also has to address some signs of maturing markets that could hamper growth. Digging into its comps, Whole Foods has sustained solid growth of 9.6% for stores that are less than five years old. But comparable-store sales drop to 2.3% for those stores that are more than 11 years old, and with 45% of its stores falling in that older category, Whole Foods has some work to do to reignite shoppers' appetites in its better-established locations.

Whole Foods has also demonstrated its ongoing commitment to shareholders. In addition to returning $43 million in capital to shareholders through dividends, Whole Foods also bought back about 900,000 shares during the quarter, spending $43 million to do so. That pace is slower than the $578 million it spent in fiscal 2014; but with share prices on the rise, Whole Foods arguably doesn't see the need to be as aggressive with repurchases.

Whole Foods investors reacted favorably to the results, sending the stock up about 2% in the first half-hour after the announcement in after-hours trading. Given the huge gains that investors have already seen in recent months, Whole Foods looks like it might be just getting started in producing long-term returns for shareholders.