Austin-based Whole Foods Market to face big earnings test.
Sales of organic and natural products are soaring — but you would never know it from the share price of Whole Foods Market, the premier purveyor of such merchandise. The organic foods giant, set to close out a challenging year as it battles declining sales and increased competition, has seen its stock price fall more than 40 percent this past year.
The Times explains that investors are “almost uniformly negative on the company” because they don’t see a bright future for Whole Paycheck in a world full of upscale Targets and where Costco sells more organic food at much lower prices. Costco, for instance, claims to be the biggest seller of organic foods, and Walmart now sells Wild Oats, a brand of organic products, at the same price as similar conventional brands. “Conventional retailers can get it into their stores more cheaply, and they can be more predatory on pricing,” said Mark Retzloff, a pioneer of the natural and organic foods retail business. “If one of those stores is just down the street from a Whole Foods, there’s a big segment of their customer base that isn’t going to shop at Whole Foods anymore.” The encroachment of traditional retailers onto turf historically dominated by Whole Foods has reminded consumers of the old nickname for the chain, Whole Paycheck, Mr. For the quarter ending Sept. 27, analysts will be watching same-store sales, which have fallen into the lower single-digits, as well as reduced earnings and revenue forecasts. “I think a lot of people are nervous here,” said Brian Yarbrough, an analyst with Edward Jones. “The stock has come way down. After that mess, Whole Foods’ sales fell immediately: Growth tumbled to just 0.4 percent, after being at 2.5 percent for weeks, and Whole Foods says it “actually hurt us worse outside New York City,” even though that’s where the price disparities occurred.
Mackey said in a wide-ranging interview during a recent trip to New York. “Sure, we could sell cheaper farmed salmon — but it’s terrible for the environment,” Mr. It’s gone from one of the most well-respected and higher-valued retailers to one of the most shunned.” The company’s earnings have disappointed Wall Street for several straight quarters. As a result, Whole Foods stock has been trading near the $30 mark, near the low end of its 52-week range of $29.73 to $57.57. “They had a very great track record and now that whole model has been turned upside down,” Yarbrough said. “This has gone from a business firing on all cylinders to really struggling.
Back-tests of such patterns show that the break even failure rate is 4%, the average rise: 37%, the throwback rate: 64% and the percentage of stocks meeting their price targets: 64%. The steaks, he said, came from organic dairy cows that had been decommissioned at about 40 months — most beef cattle are slaughtered by 24 months for taste and food safety reasons. “Sure, those steaks technically meet the organic standards, but in terms of taste and flavor, they’re not the best example of organic meat,” Mr.
Four research analysts have rated the stock with a sell rating, nineteen have assigned a hold rating, six have issued a buy rating and one has given a strong buy rating to the company. Whole Foods is one of Austin’s highest-profile companies, with 91,000 workers for 431 stores worldwide and more than 2,500 employees located in Central Texas. Its sales per square foot in the last quarter were $990, which is thought to be among the highest in the industry. (Trader Joe’s sales per square foot are thought to be much higher, but the privately held company does not report such data.) Whole Foods also has strong enough cash flow to finance new store development without resorting to borrowing, and almost no debt. Changing the direction of the company will take a significant effort to lower prices and renew the trust in its brand.” Last month, Whole Foods said it was teaming up with New York-based software company Infor to build a new cloud-based retail software platform to improve its merchandising and supply chain.
The department found an average discrepancy of $2.75 between prices Whole Foods was charging for things like fruit plates and packaged chicken and the prices it should have been charging based on weight. In its news release, the department did not mention infractions it had found at other grocers during its inspection of 120 stores in the city earlier this year. In three Gristedes stores it inspected, for instance, the average price discrepancy was $1.18, while at Key Food it was 20 cents and 12 cents at C-Town. Problem is, most investors can’t buy these companies… or any of the more than 600 fast-growing private companies on track to an IPO – unless you have millions to invest or know someone. The offices of the Firm are supported by its own headquarters, regional offices, distribution centers, bakehouse facilities, commissary kitchens, seafood-processing facilities, meat and make procurement centres, and also a specialty coffee and tea procurement and roasting operation.
The company, which apologized for the problem while emphasizing it is a common one in the grocery business, has hired a third-party auditor to monitor weights and measures in its stores and strengthened its training programs for new employees. The Company’s merchandise selection includes grocery, meat, seafood, bakery, prepared foods and catering, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins, body care, and lifestyle products including books, pet goods, and household products. They are like an old-fashioned neighborhood grocery store, an organic farmer’s market, a European bakery, a New York deli, and a modern supermarket all rolled into one! – Receive News & Ratings Via Email – Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings with MarketBeat.com’s FREE daily email newsletter. Dobrow said the new stores could be a little more like Trader Joe’s, which gets about four-fifths of its sales from higher-margin private-label products, and Sprouts, which spends less to open stores and has lower labor costs because it has no prepared foods.
Mackey is bemused by the interest in 365. “It’s not a revolutionary idea,” he said, noting that he expects the 365 concept to be to Whole Foods what Nordstrom Rack is to Nordstrom. “In Whole Foods, you can find a wedge of brie for $2.99, and you can find a wedge of triple crème brie from France that’s made with milk from grass-fed cows that sells for $40,” Mr. Mackey said. “You won’t find any $40 brie at 365.” More than 90 percent of the product selection and pricing for 365 will be set centrally, from Whole Foods’ offices in Austin, Tex., whereas such decisions are made for Whole Foods stores by regional teams and even at a store level. “Everything will be a lot more streamlined,” Mr.
Robb believe 365 will do more than just add valuable new business to the company; it will help Whole Foods introduce its philosophy of food and values to neighborhoods that cannot sustain stores’ selling $40 blocks of cheese.