Whole Foods Market: Industry Dynamics Mean More Pain Ahead
The Enterprising Value Investor • 23 Comments
The Enterprising Value Investor • 23 Comments
Why Everyone Is Wrong About Whole Foods Market (Again)
Michael Carter • 85 Comments
Michael Carter • 85 Comments
Yesterday, 1:31 PM
- Food prices are in one of their longest period of deflation since 1960 in a devastating trend for grocery store chains.
- USDA data shows nine straight months of year-over-year declines, including the sharpest of the bunch in August when prices peeled back 1.9%.
- While lower commodity costs are in play in many key categories (milk, eggs, meat), it's the relentless pressure from Wal-Mart, Aldi's, Dollar General, and even Amazon to increase traffic that's the real margin pincher.
- "It starts to border on irrational pricing," notes Bloomberg Intelligence analyst Jennifer Bartashus on the development.
- A more detailed look at food prices is available inside the latest CPI report from the Bureau of Labor Statistics.
- Related stocks: KR, SFM, WFM, SVU, WMK, IMKTA, SPTN.
Thu, Sep. 15, 10:45 AM
- Whole Foods Market (WFM) opened up its third store in the 365 format with a new location in Bellevue, Washington.
- Consistent with the other two 365 outlets, the new store has around 7K products instead of the 25K normally available at a full-sized Whole Foods store. Pricing in general is also lower.
- The 365 roll-out will proceed at a measure pace, with another ten opening anticipated by the end of next year.
- Whole Foods' next quarterly report due out on November 2 could be the first look at the pace of sales and underlying margins at 365 locations if the company breaks them out.
- Puget Sounds Business Journal 365 slideshow
Wed, Sep. 14, 2:09 PM
- All eyes in the retail sector will be on the Department of Commerce's report on August sales tomorrow. Economists will be looking for confirmation that the dip into negative territory in July was only transitory. The impact of the recent slowdown in auto sales has been debated, with some analysts saying it's indicative of tight consumer spending, while others feel it reverses the "crowding out" effect of auto purchases.
- The consensus estimate is for a 0.4% M/M gain after backing out the gas and auto categories. The direction of U.S. retail sales will also give Fed watchers their latest talking point.
- If there's a wildcard in the mix, it could be price deflation in the grocery store category (KR, SFM, WFM, SVU, WMK, IMKTA). That pricing weakness could also spill over to affect general merchandise stores (WMT, TGT), drug store chains (WBA, RAD), and even nip at chains like Casey's General Stores (NASDAQ:CASY) and CST Brands (NYSE:CST).
- Retail ETFs: XLY, XRT, VCR, RTH, RETL, IYK, FXD, IYC, FDIS, SCC, RCD, UCC, PMR, UGE, SZK.
Thu, Sep. 8, 8:38 AM
- Execs in the grocery sector have painted a bleak picture this week on current sales trends during their presentations at various retail conferences.
- Weak pricing has been a major talking point, while some companies say a lower level of government benefits have also come into play.
- While the down trend was tipped off a few weeks ago when the Commerce Department reported a drop in grocery store sales for July, the new twist is that companies such as Supervalu (NYSE:SVU) and Sprouts Farmers Market (NASDAQ:SFM) are now talking about the pressure extending through the end of the year.
- Related stocks: KR, WFM, SFS, IMKTA, WFM, CASY, VLGEA, WMK, TGT, WMT.
Wed, Sep. 7, 10:22 AM
- Weak guidance issued earlier today from Sprouts Farmers Market (SFM -13.9%) is slicing deeply through the grocery store sector.
- If there's a word to sum up the negative vibe in the sector it would be "deflation" after Sprouts execs came clean on the negative impact of falling prices.
- Decliners include Whole Foods Market (WFM -5.2%), Kroger (KR -4.1%), Supervalu (SVU -2%), Ingles Markets (IMKTA -3.4%), and Natural Grocers by Vitamin Cottage (NGVC -3.2%).
- Previously: Sprouts Farmers Market slumps after updating guidance (Sept. 7)
Wed, Aug. 3, 9:24 AM
- Retail watchers think the new smaller-store format from Whole Foods Market (NASDAQ:WFM) with its 365 introduction could become more popular across the grocery store sector.
- Early results from the two 365 stores have been positive and a recent price check indicated that the chain is very competitive on value. Perhaps even more important, the 365 concept is seen as popular with millennials and in urban areas.
- If Whole Foods expands the 365 chain aggressively it will face competition in regional markets from Trader Joe's, Natural Grocers by Vitamin Cottage (NYSE:NGVC), The Fresh Market, Sprouts Farmers Marker (NASDAQ:SFM), Ingles Markets (NASDAQ:IMKTA), and even Kroger (NYSE:KR).
Fri, Jul. 29, 4:15 PM
- Whole Foods Market (WFM -0.4%) may be full of healthy stuff, but it can't trademark "world's healthiest."
- The U.S. Patent and Trademark Office rejected Whole Foods' bid for a trademark on "World's Healthiest Grocery Store," calling it "merely descriptive."
- That's the same reason the office used years ago in rejecting a previous application by Whole Foods for "America's Healthiest Grocery Store," a decision later overturned, allowing the grocer to use that mark.
- Whole Foods had applied for the new mark to update it after it expanded beyond the U.S. into Canada and the UK.
- In two days since releasing earnings, WFM is down 9.4%.
Thu, Jul. 28, 3:40 PM
- Whole Foods Market (WFM -9.9%) wants to change its tagline now that it has expanded internationally.
- The company has a trademark application filed with the USPTO for the phrase "world's healthiest grocery store."
- The current tagline of "America's healthiest grocery store" has been in use for several years.
- Shares of Whole Foods are down sharply on the day after Q2 earnings disappointed, but have held off from swinging below $30.
- Previously: Whole Foods sees falling transaction growth in FQ3, 365 impact begins (July 27)
Thu, Jul. 28, 9:16 AM
- Gainers: EVOK +31%. GRPN +29%. OCN +25%. ALR +20%. N +18%. ESI +15%. TPX +15%. GRUB +13%. LOGI +13%. VSTM +12%. CRUS +11%. ASPS +11%. CHCI +11%. EBIO +11%. AXTI +11%. VNR +9%. SPHS +9%. VGZ +8%. KONA +7%. CLF +6%. ARIA 6%. SPU 5%. YNDX 5%.
- Losers: INFN -32%. ARGS -18%. AVXL -10%. IVTY -10%. F -8%. CIEN -8%. CBD -8%. XCOM -7%. EXAS -6%. WFM -5%.
Wed, Jul. 27, 4:32 PM
- Whole Foods Market (NASDAQ:WFM) reports comparable-store sales fell 2.6% in FQ3. Comparable-store sales are down 2.4% in FQ4 through June 24.
- Average basket size during the quarter decreased 0.1%. The number of transactions were down 2.7%.
- The company's gross margin declined 89 bps Y/Y to 34.7%. There was a sequential improvement from the 34.0% mark of FQ2.
- SG&A expense rate +11 bps to 28.5.
- EBITDA was reported at 8.8% of total sales. Adjusted return on invested capital was 13%.
- Guidance: The company expects sales growth of 2% and EPS of $0.23 to $0.24 in FQ4. A slight drag from the value strategy and disinflation is cited. Square footage growth of approximately 7% for FY16 and 6% for FY17 is anticipated.
- The company has a conference call scheduled for 5:00 ET. More details on the 365 roll-out are likely to be discussed.
- WFM -3.86% after hours to $32.41.
Wed, Jul. 27, 4:28 PM
Tue, Jul. 26, 5:35 PM
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Tue, Jul. 26, 12:59 PM
- Whole Food Market (WFM -0.8%) is lower after Goldman Sachs cuts the stock to a Sell rating from Neutral on its view the ground has shifted for the grocery store operator.
- "Whole Foods is experiencing a competitive barrage, losing share in its core natural and organic business to a variety of players," warns GS.
- Goldman on the long-term: "Wellness has gone mass, and it is not coming back, never again to be relegated to niche specialty retailers serving price-insensitive, early adopters."
- Earlier today, the investment firm named Kroger as a Conviction Buy List stock.
Mon, Jul. 25, 9:15 AM
- Macquarie upgrades Whole Foods Market (NASDAQ:WFM) to an Outperform rating from Neutral.
- Wall Street firms have been backing Whole Foods this month in force, with Oppenheimer, Credit Suisse, and Royal Bank of Canada all reiterating their positive outlook.
- Whole Foods reports earnings on Wednesday.
- WFM +2.25% premarket to $34.48.
Fri, Jul. 22, 5:37 PM
Fri, Jul. 22, 7:41 AM
- Jefferies warns on a miss by Whole Foods Market (NASDAQ:WFM) on comparable-store sales when it reports FQ3 results on July 27.
- The company reported a 3% drop in comparable sales for FQ2, with both average basket size and transaction count lower for the period.
- Consensus FQ3 estimates on Whole Foods are for revenue of $3.693B and EPS of $0.37, while analysts expect another quarter with a negative comp.
- Shares of Whole Foods are up 12% since the last time the company spilled earnings numbers.