kdo

Whole Foods' Mackey: Eat Meat, But Don't Go

You've got to be joking to think that Mackey was really attempting to push down OATS by making some lame comments on the Yahoo message board. You really believe that the big money that's investing in various investment management teams are going to do all their research, discount some cash flows, talk to people, interview different suppliers, people in the company, walk around, guage all the competition, understand pricing, etc, et. al. And then read from some idiot on the Yahoo message boards and abandon it? It would be one thing if Mackey was submitting hundreds of emails in various identities in a short time period, which even still it would be dubious to believe it would ever really affect the stock price. Here's a hint about the message boards. If I had a dime for every useful bit of information I ever collected on a Yahoo message board, I'd still be looking for my first dollar.

Whole Foods: Love the Company, Avoiding the Stock

I'm surprised you think 7% SSS is a case to stop growing? Do you really care if it's a chartists dream? So Whole foods has gone from low teen SSS for several years and now it's going to be a zero, almost immediately because WMT is going to carry organics? Actually I'd be more inclined to think this was a good analysis if it came when WF was doing well and pointing out it was likely unsustainable and the stock was way ahead of itself.

A wonderful thing that Starbucks discovered was that on a product everyone sees as totally commoditized, that they can still charge more for it and do it for years on end. So why is that? 180 total stores don't seem like a lot to me for a grocery chain, where convenience is key.

Whole Foods: Love the Company, Avoiding the Stock

I'd suggest you look at their plans for rolling out new stores by the end of the decade before you cast your stone about what the growth rate looks like. It looks to me like you just chose an arbitrary number. Of course they're under more pressure, but a trip to competing supermarkets will show that they are still focused on different customers. I have personally not been extraordinarily impressed by renovations at Safeway that are supposed to materially make them more competitive. The last several years have shown extraordinary SSS, not not very extraordinary square footage growth. That's going to start to reverse itself. IMO, the SSS were unsustainable, especially in light that new competition is of course on it's way. SSS may be decelerating, but they're not overall horrible numbers and there's gonna be a lot of new total square footage around by 2010 - actually a little above CAGR of 15%, the number you chose from thin air and that excludes the purchase of OATS, which was a POS and I do believe WFMI should be able to improve profitability. Execution risk? - definitely.

I fully understand many very smart people think that margin contraction is a foregone conclusion and obviously that is what needs to be watched closest.

Good luck in your investing.

greg