The highly popular organic foods company, Whole Foods (NASDAQ:WFM), tumbled nearly 10% after posting quarterly results earlier this month. A slowdown in its business, coupled with rising costs, spurred speculation that the high-end grocery market might be worth shorting. So what are investors to do? Go long, do nothing, or go short?
Whole Foods' last quarterly EPS came in at $0.78, up 20% from the same quarter last year. The frightening part for investors was management's poor guidance for 2013. Whole Foods now expects to see full-year 2013 EPS of $2.83 to $2.87, compared to previous analysts' expectations of $2.90. The lowered guidance comes as a result of margin compression, which the company expects to see for the rest of the year.