Whole Foods Markets, Inc. (NASDAQ: WFMI), once the grocery darling of the investing market, took a serious wrong turn somewhere in the M&A market in 2007. Ever since the ill-fated acquisition of Wild Oats, WFMI has taken a dive, plunging from highs in the $60s (2006) and $50s (until late 2007) to as low as $8.68 this past December. So it was with great joy that investors heralded news of the company's fiscal third quarter results last night, exceeding analyst expectations, with earnings per share of $0.25, or $35.0 million, and sales up 2% over the year-ago quarter, to $1.9 billion. Same-store sales declined compared to the year-earlier quarter, but reversed their declining trend, down 2.5% from Q3 2008 but up from Q2 2009.Immediately, investors cheered, sending the stock up $3.88, or 15.6%, to $28.70 by the end of trading today. In intraday trading, the stock eclipsed its 52-week high. And what was even more interesting than a run up in the stock's price was news that CEO John Mackey, whose new diet has him off refined fats (and looking trim and slim, if you were wondering -- no word on how it's impacted his famously bombastic mood) has decried the abundance of "junk" in his company's stores. He plans to change that, effective now.
Mackey told investors, "We sell a bunch of junk. We've decided if Whole Foods doesn't take a leadership role in educating people about a healthy diet, who the heck is going to do it?" As I wrote on DailyFinance, Whole Foods has long taken a leadership role in ridding its shelves of the excoriated ingredient of the moment -- whether that was partially hydrogenated vegetable oil in cookies or bleach in baby diapers. The emerging trend in food is to remove refined ingredients; sugar, flour, and fats, a move toward whole foods. If any store is positioned to take advantage of this trend, Whole Foods has got to be the one.
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Reader Comments (Page 1 of 1)
8-06-2009 @ 5:45AM
al coholic said...
While there will always be a niche for stores like Whole Foods people who can't keep their mortgages current will ultimately stop paying a huge premium for their products.
Call me a cynic but the way things are done in business I can't help but wonder how organic all this stuff really is. Who knows for sure how the hell all these farmers really mind their P's and Q's when they grow all this stuff? It wouldn't surprise me if a study showed that the organic nature of a lot of this high priced stuff is questionable.
8-06-2009 @ 7:14AM
Jon said...
Its all about 3rd party auditors ... Everything organic at Whole Foods can be traced back quite awhile ..
8-06-2009 @ 3:12PM
al coholic said...
Somehow I don't find that very reassuring.
8-14-2009 @ 12:18PM
Kate said...
There are boycotts of Whole Foods now being planned nationwide in response to Mackey's editorial in the Wall Street Journal about healthcare reform. Wonder if it will affect anything.