• U.S. Based Supermarket Chain

• Operates specifically within the “Natural and Organic Foods

Supermarkets” segment

• World’s leading retailer of natural and organic foods, currently holding a 15%

market share of the $65B segment

• Market segment is growing more rapidly than the overall retail grocery industry

• Whole Foods Market, Inc. was the first “Certified Organic Retailer”

• Currently operates 311 stores and employs 64,200 staff

• Differentiated Product Offering

• High quality natural and organic foods with a strong emphasis on

perishables, offered at multiple price points

• Publically traded on NASDAQ since 1992 – 18.6B Market Capitalization

• Has delivered returns to shareholders through dividends and price

appreciation (Stock price up > 1000% from 2008 low)

Key Risks

• Exposure to global macroeconomic factors• Fluctuations in consumer

spending, inflation, etc.

• Future labeling regulations• May no longer be able to market GMO

products as “natural”

• Could decrease brand loyalty

• Increased competition• Expansion of conventional grocery

retailers into organic and natural product offerings

• Any loss of key management could adversely affect growth trajectory, company culture, and overall business strategy

Key Merits

• Whole Foods is already the market leader in their segment• First-mover advantages

• Strong brand image and loyal customer base• Difficult for competitors to come in

and profit

• Well-trained and experienced employees and management• Commitment to employee satisfaction,

very low employee turnover rate

• Highly experienced Real-Estate sourcing team

• Leader in healthy eating awareness campaign• As awareness and concerns grow for

healthier eating , revenue growth in the segment will follow

Financial Analysis• Stable Top-Line Growth

• 5 year CAGR of 11.28% vs. an industry average below 4%

• Second highest in revenue growth only to The Fresh Market (TFM)

• Increasing Operating Efficiency and Profitability• Operating margins have steadily increased as expenses decline as a percent of sales

• Decreases in relocation, store closure, lease-termination, and pre-opening costs fueling the increase in operating efficiency

• Steadily increasing EBITDA, EBIT, and Net Income margins

• ROA and ROE Doubled Over 5 Years – Still Needs Improvement• ROE (11.45%) is below industry average (13.5%), and ROA (7.98%) is slightly below

their WACC (8%), suggesting a possible struggle to create shareholder wealth

• Increasing Liquidity• Expanding of current asset base to fund future growth opportunities

• Cash & cash equivalents and available-for-sale securities

• Deleveraging Capital Structure• Repayment of $490 million term loan resulting in increased debt capacity

Investment Summary

• Whole Foods Market, Inc.’s dedicated management team has stabilized an ambitious business strategy, poising the company to increase expansion rates and market share

• Whole Food’s leading market share in the natural and organic foods segment, as well as their growing brand recognition and customer loyalty has created a relatively difficult environment for competitors to profit

• As Whole Foods continues to enhance supplier relationships and streamline their operations, they will continue to foster increases operating efficiency and profitability

• With the rapid increase in organic and natural foods as an overall percent of the retail grocery industry, Whole Foods is in a position to capture the largest percent of that sales growth

• After careful analysis, the merits and financial performance of Whole Foods Market, Inc. appear to outweigh the corresponding risks, and thus would provide a good investment opportunity.

• These slides cannot be used with out the written consent of the uploader, William O’Hara.