2 0 04 A n n u a l Re p o r t

Our core values reflect the sense of collective fate among our stakeholders and are the soul of ourcompany. Our Team Members, customers, shareholders, vendors, community and environment mustflourish together through their affiliation with us or we are not succeeding as a business. It is leadership’srole to balance the needs and desires of all of our stakeholders and increase the productivity ofWhole Foods Market. By growing the collective pie, we create larger slices for all of our stakeholders.Our Core Values: � Selling the Highest Quality Natural and Organic Products Available � Satisfyingand Delighting Our Customers � Team Member Happiness and Excellence � Creating Wealth ThroughProfits and Growth � Caring About Our Communities and Our Environment

2004 was the best year in our 24-year history.

Financial Highlights 2004 2003 2002 2001 2000

sales (000s) $ 3,864,950 $ 3,148,593 $ 2,690,475 $ 2,272,231 $ 1,838,630operating income (000s) $ 216,646 $ 167,379 $ 140,985 $ 104,459 $ 94,643diluted eps from continuing operations $ 1.98 $ 1.58 $ 1.32 $ 0.84 $ 0.46number of stores at end of fiscal year 163 145 135 126 117average weekly sales per store $ 482,000 $ 424,000 $ 393,000 $ 353,000 $ 325,000comparable store sales increase 14.9% 8.6% 10.0% 9.2% 8.6%

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Dear Fellow Stakeholders:

I want to appreciate all of our Team Members for their

continued hard work and dedication and all of our customers

and shareholders for their continued support. In a year that

was challenging for most food retailers, we grew sales 23%

to just under $4 billion. Our 14.9% comparable store sales

increase set a new company record. We had strong sales

every quarter and across all regions, all departments, and

all age classes of stores. Even our stores over eight years of

age produced double-digit sales increases. Eighty-four percent

of all stores set weekly sales records and our sales per

gross square foot were $786, up from $716 last year.

Our net profit margin for the year improved 25 basis

points to 3.4% of sales, we produced a 21% increase in

diluted earnings per share to $1.98, well ahead of our initial

guidance of $1.87 to $1.95, and we reported four consec-

utive quarters of positive EVA resulting in record EVA improve-

ment of $12.6 million.

We earned $330 million in cash from operations which

allowed us to self fund our $265 million in capital expen-

ditures, of which $155 million was for new stores, as well

as $28 million paid to shareholders in quarterly cash div-

idends that we initiated at the beginning of the year. We

were very pleased to have the confidence in our financial

position to increase that quarterly dividend 27% to $0.19

per share at year end.

Our industry-leading performance and strong balance

sheet position led to our corporate credit rating being raised

to investment grade by both Moody’s Investors Service and

S&P Ratings Services and to a sharp 59% increase in our

stock price during the fiscal year.

Last year I spoke of three goals that were created during

our 2003 Future Search process which stood out for us as

major priorities in 2004. We made significant progress dur-

ing the year toward each of these goals.

G lo b a l E x pan s i o n

During the year, we opened our second store in Canada and

acquired six Fresh & Wild stores in the United Kingdom.

Growth Since IPO 9 /26 /04 9 /29 /91* cagr

number of stores 163 11 24%sales $3.9 b $92.5 m 33%earnings per share $1.98 $0.17 21%team members 32,100 1,100 30%stock price $84.73 $4.25 27%

*19 91 results do not include the impact of subsequent pooling transactions. Stock price is split-adjusted IPO price in Januar y 19 92.

2

Where Does the Money Go?

63.1%Cost of GoodsSold/Occupancy

24.2%Salaries/Benefits

9.2%Income Taxes/Other Expenses

3.4%Net Income

We are very excited about expanding our presence in

Canada and extending our company mission and the Whole

Foods Market brand beyond North America and into Europe.

The U.K. was an obvious choice due to the advanced

acceptance of organics and the lack of language barriers

there. We felt an acquisition was the right strategy for our

first overseas venture because, as with other successful

acquisitions we have made, the infrastructure and intel-

lectual capital we gained provided us with an immediate

platform for expansion. We are actively exploring real estate

opportunities in the London area with the goal of signing

a lease for a large format Whole Foods Market store in the

very near future.

A n i m a l C o m pas s i o n Stan da rd s

We decided the existing paradigm for animal production

should change and that we now have the scale and scope

to make a difference. Last year we began a rigorous process

of creating enhanced farm animal treatment standards

beyond the strict animal welfare we already required. These

enhanced standards are being developed jointly by Whole

Foods Market, animal welfare advocacy groups and various

farmers and ranchers that we do business with, and focus

on providing environments that best support the animals’

natural physical needs, behavior and well being. This year we

created standards for several species but hope to complete

standards for every species we sell over the next three years.

We also created an Animal Compassion Foundation which

will provide education and research services to assist and

inspire ranchers and meat producers around the world to

achieve a higher standard of animal welfare excellence while

still maintaining economic viability. Please check our web-

site for additional information about our welfare standards

and the Animal Compassion Foundation.

Wh o le Fo o d s M a r k et Un ive rs ity ( W F M - U )

As we continue to expand, maintaining our Team Members’

passion for our Mission and Core Values is an essential

ingredient in setting us apart from our competitors. Cindy

Bradley, formerly our VP of Team Member Services, was

selected as our new VP of Learning at WFM-U. The vision for

WFM-U is to create online, self-paced learning modules that

will engage our Team Members in active education and devel-

opment. The “U-Learn Network” was launched this year and

several modules, made up of learning vignettes, are already

accessible. In the future, we hope to create product-related

training materials that will be accessible to both Team

Members and customers, thereby creating an in-store learn-

ing environment that will become an important part of

the Whole Foods Market shopping and work experience.

“Building on the strength of 2004, I’m lookingforward to an even brighter 2005!”

The question I am asked most often is “how many Whole

Foods stores can there be?” I don’t answer that question

anymore because I have always been wrong in the past,

thankfully on the low side. We certainly are not limited by

opportunity as demographically the world continues to move

in our direction with an overall aging of the population and

a growing interest in health, well-being and longevity. Our

2004 class of new stores was our best yet, with the 12 new

stores (six of which were in new markets) averaging $575,000

in weekly sales for the year. We believe the fact that our new

stores are successful in markets as diverse as New York

City and Charleston, South Carolina, speaks to the broad

appeal of our stores and the growing awareness of our brand.

And, while I am not ready today to say our comparable store

sales have broken out of their historical 8% to 9% range,

we certainly have seen accelerating trends over the last ten

ence in Canada and extending our company mission and

the Whole Foods Market brand beyond North America and

into Europe. The U.K. was an obvious choice due to the

advanced acceptance of organics and the lack of language

barriers there, and we felt an acquisition was the right strat-

egy for our first overseas venture because, as with other

successful acquisitions we have made, the infrastructure

and intellectual capital we gained provided us with an imme-

diate platform for expansion. We are actively exploring real

estate opportunities in the London area with the goal of

signing a lease for a large format Whole Foods Market store

in the very near future.

A n i m a l C o m pas s i o n ate Stan da rd s

We decided the paradigm for animal production must

change and that we have the scale and scope to make a

difference so last year we began a rigorous process of creat-

ing enhanced farm animal treatment standards beyond the

strict animal welfare we already required. These enhanced

standards are being developed jointly by Whole Foods

Market and animal welfare advocacy groups and focus on

providing environments that best support the animals’

natural physical needs, behavior and well being. This year

we created standards for several species but hope to com-

plete standards for every species we sell over the next three

years. We also created an Animal Compassion Foundation

which will provide education and research services to assist

and inspire ranchers and meat producers around the world

to achieve a higher standard of animal welfare excellence

while still maintaining economic viability. Please check our

website for additional information about our animal wel-

fare standards and Animal Compassion Foundation.

Wh o le Fo o d s M a r k et Un ive rs ity ( W F M - U )

As we continue to expand, maintaining our Team Members’

passion for our Mission and Core Values is an essential

ingredient in setting us apart from our competitors. Cindy

Bradley, formerly our VP of Team Member Services, was

selected as our new VP of Learning at WFM-U. The vision for

WFM-U is to create online, self-paced learning modules that

will engage our Team Members in active education and devel-

opment. The “U-Learn Network” was launched this year

and several modules — made up of learning vignettes —

are already accessible. In the future, we hope to create

product-related training materials that will be accessible

to both Team Members and customers, thereby creating an

in-store learning environment that will become an impor-

tant part of the Whole Foods Market shopping and work

experience.

“Building on the strength of 2004, I’m looking for-ward to an even brighter 2005!”

The question I am asked most often is “how many Whole

Foods stores can there be?” I don’t answer that question

anymore because I have always been wrong in the past,

thankfully on the low side. We certainly are not limited by

opportunity as demographically the world continues to

move in our direction with an overall aging of the popu-

lation and a growing interest in health, well being and

longevity. Our 2004 class of new stores was our best yet,

with the 12 new stores (six of which were in new markets)

averaging $575,000 in weekly sales for the year. We believe

the fact that our new stores are successful in markets as

diverse as New York City and Charleston, South Carolina,

We are very pleased to announce that for the eighth year in a row our Team Members have rankedus as one of Fortune magazine’s “100 Best Companies to Work For.” In determining who makes thelist, Fortune evaluates company benefits and practices but places the greatest weight on responsesfrom a random survey of employees. With more than 32,000 Team Members, of which approximately84% are full-time, we are the only national food retailer to make the list. We moved up 17 places fromlast year to number 30 this year, our highest placement on the list so far, and of the 37 large companieslisted, we were ranked fifth. We were also recognized in the new Hall of Fame list of 22 companiesthat have appeared on the “100 Best” list since its inception in 1998.

E PA O C TO B E R 5, 2 0 04 – The Environmental Protection Agency (EPA) recognized us for our green power purchases with a 2004 Green Power Leadership Award. We currently purchase or generate more than 20% of our total national power from green power sources each year. 3

At 59,000 square feet, our Columbus Circle store in the Time Warner Center is the largest food storein Manhattan. It is a true foodie paradise offering culinary treasures from the finest authentic artisansand renowned purveyors of produce, meat, seafood, cheese, coffee, and baked goods that are free ofhydrogenated oils, artificial additives, preservatives, and sweeteners. Some of the store’s unique offer-ings include: a 248-seat café where shoppers can enjoy our restaurant-quality prepared foods; a fullservice Sushi Bar featuring fresh-cut sushi wrapped in organic seaweed; a walk-in Greenhouse show-casing fresh cut and exotic flowers; a Wine Shop serving more than 700 varieties of wine; and aChocolate Enrobing Station where customers can request just about anything to be covered in chocolate.

4

years, and most dramatically over the last year which

seems to indicate we are still significantly under-stored.

Our goal is to produce 15% weighted average square

footage growth in fiscal 2005 and beyond. We have suffi-

cient capital available to meet this goal, and over the last

five quarters, we have announced seven or more newly

signed leases creating a pipeline of 53 stores covering 21

states, Ontario, Canada, and the United Kingdom. These

stores average 49,000 gross square feet, a 53% increase

over our existing average store size of 32,000 gross square

feet. Our pipeline totals a record 2.6 million square feet,

a 63% increase in square footage under development over

last year, and represents 50% of our existing square footage.

Our biggest challenges in 2005 center around meet-

ing our higher square footage growth goals while delivering

strong results in light of the difficult comparisons we are

facing, particularly in the first half of the year. Despite 2004

being our best year ever, we still expect sales growth of 15%

to 20% and comparable store sales growth of 8% to 10%

in 2005. Due primarily to significantly higher pre-opening

expenses, it is likely our EPS growth will be lower than our

sales growth. In addition, new stores could have some

negative impact on store contribution, as new stores gen-

erally have lower gross margins and higher direct store

expenses than more mature stores.

The changes we made to our executive team and to

our operating structure will better position us for the

accelerated growth ahead. I transferred the title of Presi-

dent to Walter Robb and A.C. Gallo, and we promoted Lee

Valkenaar to the new position of Executive Vice President

of Global Support. We also expanded our number of oper-

ating regions from eight to ten for better regional support

of our existing store base as well as for our anticipated

future growth in those areas.

Even as we have grown at a rapid pace, hiring thou-

sands of new Team Members each year, we have managed

to spread and perpetuate our culture and this remains a

top priority for us. One of our secrets is what I refer to as

our “yogurt culture.” For example, in our Columbus Circle

store, about 25% of the Team Members transferred from

existing stores. They were the starting culture that launched

the fermentation that turned Columbus Circle into a true

Whole Foods store. I will always remember when we opened

our second store back in 1982, and Team Members told me

they feared we would get way too corporate and lose what

made us special. But we have proven that it doesn’t matter

how large we get as long we stay true to our core values

and continue to maintain and attract Team Members who

share our passion.

Our motto — Whole Foods, Whole People, Whole Planet™

— emphasizes that our vision reaches far beyond just food

retailing. We are focused on selling the highest quality

natural and organic foods in the world and helping evolve

a better person, company and world through our dedica-

tion to our core values, stringent quality standards and

principles of right livelihood, Team Member empowerment,

community service, conscientious retailing and sustain-

able agriculture.

We look forward to sharing and extending our vision

with the rest of the world as we open bigger and better

new stores at an accelerated rate in the years ahead, as

the brand awareness of Whole Foods Market continues to

increase, and as we progress toward our goal of $10 billion

in sales by the year 2010.

With warmest regards,

J o h n M ac k ey

C h a i r m an o f th e B oa rd

C h i e f E x e c utive O f f i c e r

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6

Rolando Alas

Produce Team Leader,Mill Valley

Tee Ayer

Store Team Leader,Galleria

Michael Besancon

President, SouthernPacific Region

Julie Birdsong

Project Leader, Central Support

Cindy Bradley

Vice President ofLearning/WFM-U

Patrick Bradley

President, MidwestRegion

Tana Bronk

Whole Body TeamMember, Madison

Sean Byrne

Meat Team Leader,Pasadena

Steve Campbell

Store Team Leader,Campbell

Janet Chaykin

Bakery Coordinator,Southwest Region

Barbara Coffman

Whole Body TeamLeader, Durham

Laura Derba

Store Team Leader,University Heights

Christopher Phillips-Frishman

Store Team Leader,West Bloomfield Hills

Omar Gaye

Store Team Leader,Alpharetta

Gary Giles

Seafood Team Leader,Pearl

Anthony Gilmore

President, NorthernCalifornia Region

Stephen Goldberg

Prepared FoodsDirector, NorthAtlantic Region

Robin Graf

Team Member Serv-ices Director, South-ern Pacific Region

Forrest Hoffmaster

Director ofOperational Finance,Mid-Atlantic Region

Don Hosfeld

Grocery Team Leader,Ft. Lauderdale

Bill Jordan

Vice President,Southern Pacific Region

George Khoury

Vice President,Southern Pacific Region

Paula Labian

Vice President of TeamMember Services

Roberta Lang

Vice President,General Counsel

Whole Foods Market recognizes excellence in leadership throughout the company with our GlobalAll*Star awards. With more than 32,000 Team Members in over 200 stores, facilities and officesacross the company, being recognized as a Global All*Star is a true achievement. We honor these48 individuals who have set incredibly high standards and have achieved truly outstanding resultsover the course of the past year.

2004 Global All*Stars

7

Terry Layton

Whole Body TeamLeader, WalnutCreek

Joel Leonard

Prepared Foods TeamLeader, Fresh Pond

Mike Litka

Store Team Leader,Marlton

Jennifer McFarlin

Payroll BenefitSpecialist, Madison

Adam Mitchel

Store Team Leader,Madison

Alanya Nelson

In Store Educator,Madison

Chris Pine

Vice President of Real Estate

John Robertson

Store Team Leader,Charlottesville

Joe Rogoff

Vice President,Northern CaliforniaRegion

Gerre Scherz

Store Team Leader,Wilcrest

David Schwartz

Vice President,Midwest Region

John Simrell

Director of Finance,South Region

Kel-e Sherman

Team MemberServices Director,Midwest Region

Dodi Steiniger

Director ofOperational Finance,Southern Pacific Region

Ron Stockman

Whole BodyCoordinator, FloridaRegion

Rocco Terrazano

Meat Team Leader,Yorkville

Jeff Teter

President & GeneralManager, AllegroCoffee Company

Michael Thompson

Store Receiver,Madison

Robert Thompson

Store Team Leader,Thousand Oaks

Julianne Ugo

Team Member ServicesCoordinator, NorthernPacific Region

Bobby Turner

Bakery Coordinator,Midwest Region

Theo Weening

Meat CategoryManager, Mid-AtlanticRegion

Felicia Williams

Customer Service TeamLeader, Rose City

Mark Wilson

Produce Coordinator,Southern PacificRegion

Our motto—Whole Foods, Whole People, Whole Planet™—emphasizes that our vision reaches farbeyond just food retailing. Through our new Animal Compassion Foundation, we will provide edu-cation and research services to assist and inspire ranchers and meat producers around the world to achieve a higher standard of animal welfare excellence while still maintaining economic viability.We believe the existing paradigm for animal production should change, and we now have the scaleand scope to make a difference. Just as we played an important role in the creation of organic standards,we will work to raise the bar in treating farm animals with more compassion, and we hope other retail-ers and animal producers will follow our lead.

8

Whole Foods MarketLeadership Team

Scott AllshousePresidentSouth Region

Michael BesanconPresidentSouthern Pacific Region

Cindy BradleyVice President of Learning

Patrick BradleyPresidentMidwest Region

Mike CliffordVice PresidentChief Information Officer

Mark DixonPresidentSouthwest Region

Glenda FlanaganExecutive Vice PresidentChief Financial Officer

Betsy FosterVice PresidentPurchasing and Distribution

A.C. GalloCo-PresidentChief Operating Officer

Anthony GilmorePresidentNorthern California Region

Marc JonnaNational Wine Buyer

Paula LabianVice PresidentTeam Member Services

Edmund LaMacchiaNational Produce Coordinator

Roberta LangVice PresidentGeneral Counsel

David LannonPresidentNorth Atlantic Region

Cindy McCannVice PresidentInvestor Relations

John MackeyChairman of the BoardChief Executive Officer

Lee MateckoVice PresidentOperational Finance

Ron MegahanPresidentPacific Northwest Region

Ken MeyerPresidentMid-Atlantic Region

Juan NunezPresidentFlorida Region

Will ParadisePresidentRocky Mountain Region

Walter RobbCo-PresidentChief Operating Officer

Jim SudExecutive Vice President Growth and BusinessDevelopment

Lee ValkenaarExecutive Vice PresidentGlobal Support

Margaret WittenbergVice PresidentMarketing and Public Affairs

Board of Directors

David W. DupreeManaging DirectorThe Halifax Group

Dr. John B. ElstrottDirectorLevy-Rosenblum Institute for Entrepreneurship, Tulane University’s FreemanSchool of Business

Avram J. GoldbergChairman of the BoardAVC AR Group, Ltd.

Gabrielle E. GreeneChief Financial Officer, Villanueva Companies

John MackeyChairman of the Board andChief Executive OfficerWhole Foods Market, Inc.

Linda A. MasonChairman of the Board,Bright Horizons Family Solutions

Morris J. SiegelFormer Vice Chairman of the Board, The Hain Celestial Group, Inc.

Dr. Ralph Z. SorensonManaging Partner,Sorenson Limited Partnership

Corporate and Shareholder Information

Trading Information

The common stock of WholeFoods Market is traded on theNasdaq Stock Market (symbol:WFMI). If you wish to become a shareholder, please contact astockbroker.

Dividend Policy

In November 2003, the Board of Directors declared a quarterlydividend of $0.15 per share, or$37 million, to shareholders infour quarterly dividends duringthe fiscal year. In November2004, the Board of Directorsapproved a 27% increase in thequarterly dividend to $0.19 pershare. The first $0.19 per sharequarterly dividend was payable inJanuary 2005, and the Companyexpects to pay approximately $48million in dividend payments toshareholders in fiscal year 2005.

Ordering Financial Statements

A copy of our Annual Report orForm 10-K may be obtained bywritten or phone request to:

Shareholder ServicesWhole Foods Market, Inc.550 Bowie StreetAustin, Texas 78703512.477.5566 ext. 20801

Annual Meeting

April 4, 20059:00 a.m. (EDT)New York Marriott East Side Hotel525 Lexington AvenueNew York, New York 10017

Transfer Agent & Registrar

Information about stock certifi-cates, change of address, owner-ship transfer or other stock matters can be obtained from:

Securities Transfer Corporation2591 Dallas Parkway, Suite 102Frisco, Texas 75034469.633.0101www.stctransfer.com

Independent AuditorsErnst & Young LLPAustin, Texas

Visit our web site www.wholefoodsmarket.com

Whole Foods Market, Inc.550 Bowie StreetAustin, Texas 78703www.wholefoodsmarket.com