WFMI - Any opinions on yesterdays 5% cut?
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This is actually a great buying opportunity IMO, and I will be adding whole foods to my portfolio this week. They are one of Morningstar's favorite stocks, and here is the most recent write up that they've done regarding their missing estimates and drop in stock price...
Whole Foods Will Bounce Backby Mitchell P. Corwin, CFA, CPA | 05-10-07 | 9:24AM | E-mail Article | Print Article
We cautioned that 2007 would be a weaker year for Whole Foods Market WFMI, but the company's disappointing second-quarter results, reported Wednesday, were compounded by the disclosure of concerns by the Federal Trade Commission regarding the proposed transaction with Wild Oats Markets OATS. Despite all the negative noise, we remain confident in Whole Foods' business model and long-term prospects, and we are not changing our fair value estimate ($72).
Total sales were up 11.6% year over year, with comparable-store sales (or comps) rising a soft 6.0%, or 5.1% excluding the positive impact of an Easter shift. While we expected operating margins to be pressured by the high number of new stores the company opened in the quarter, negative leverage on existing stores was a bit surprising. In our view, this indicates that the company itself expected better comp growth. Plain and simple, the company had a poor quarter. That said, we continue to believe that Whole Foods will start to turn the corner later in the year, and all indications are that the new stores are performing well.
Regarding the FTC issue, the notion that joining two grocers with combined sales last year of $6.8 billion in a $500 billion supermarket industry would spark antitrust concerns is completely ludicrous, in our opinion. Even in the natural and organics market, we think the two firms together would have less than 20% share. Given those statistics and the fact that the FTC has recently blessed much more questionable deals from an antitrust perspective, we think the commission has no fundamental reason to block the transaction.
Whole Foods Will Bounce Backby Mitchell P. Corwin, CFA, CPA | 05-10-07 | 9:24AM | E-mail Article | Print Article
We cautioned that 2007 would be a weaker year for Whole Foods Market WFMI, but the company's disappointing second-quarter results, reported Wednesday, were compounded by the disclosure of concerns by the Federal Trade Commission regarding the proposed transaction with Wild Oats Markets OATS. Despite all the negative noise, we remain confident in Whole Foods' business model and long-term prospects, and we are not changing our fair value estimate ($72).
Total sales were up 11.6% year over year, with comparable-store sales (or comps) rising a soft 6.0%, or 5.1% excluding the positive impact of an Easter shift. While we expected operating margins to be pressured by the high number of new stores the company opened in the quarter, negative leverage on existing stores was a bit surprising. In our view, this indicates that the company itself expected better comp growth. Plain and simple, the company had a poor quarter. That said, we continue to believe that Whole Foods will start to turn the corner later in the year, and all indications are that the new stores are performing well.
Regarding the FTC issue, the notion that joining two grocers with combined sales last year of $6.8 billion in a $500 billion supermarket industry would spark antitrust concerns is completely ludicrous, in our opinion. Even in the natural and organics market, we think the two firms together would have less than 20% share. Given those statistics and the fact that the FTC has recently blessed much more questionable deals from an antitrust perspective, we think the commission has no fundamental reason to block the transaction.
Whole Foods is a great store...but they are pricey and if we see consumer spending reigned in it could hurt them. A company like Trade Joes(not public as far as I know) would be a better investment...Whole Foods prices are much higher than typical supermarkets, whereas a place like Trader Joe's has exotic-type foods and healthy products at a price rather comparable to chain supermarkets.
Whole Foods is a great store, but I am just not sure they can cut the mustard if people who are over-extended debt-wise have to choose between a gallon of gas at $3.50 or a pound of fine Spanish olives.
That being said, they just opened up a new Whole Foods on Houston St. in NY and it kicks ass and has a load of good foods...I do shop there!
Whole Foods is a great store, but I am just not sure they can cut the mustard if people who are over-extended debt-wise have to choose between a gallon of gas at $3.50 or a pound of fine Spanish olives.
That being said, they just opened up a new Whole Foods on Houston St. in NY and it kicks ass and has a load of good foods...I do shop there!
That's true. I also think they're, in a way, a victim of their own success. I know several people who will no longer go into the local WF stores because they are so incredibly crowded that going in there to buy anything is a miserable experience. What makes it even worse is that they pile up a bunch of shit on tables right by the entrance so even getting in the door is like fighting your way through a crowded maze.
A couple of people I know (who don't know each other) said the same thing to me: "When I walk in there, I immediately start getting angry. I don't know what it is." That's caused by tons of people being packed into small stores like rats, rats fighting over organic brie and free range chicken.
Don't know about you, but I would think that Whole Foods constantly being packed would be a good thing for the company.