Whole Foods Market “ Whole Foods, Whole People, Whole Planet ” Hiroko Takashima.
Post on 28-Dec-2015
Whole Foods Market
Whole Foods, Whole People, Whole Planet Hiroko Takashima
*U.S. sales of organic food and beverages is growingU.S.sales of organic food and beverages: $26.7 billion in 2010 (cf. $6 billion in 2000)
Represented 7.7% growth over 2009 sales
Approximately 4% of U.S. overall food and beverage sales in 2010
Over 11% of all U.S. fruit and vegetable sales
*Whole Foods Market : Products & ServicesFounded in 1978 and is headquartered in Austin, Texas.
Operating natural and organic food supermarkets
Operated 316 stores (as of November 2, 2011)the U.S. (303), Canada (7), and the U.K (6)
Annual sales: $10 billion in 2011Full Time Employees: 48,200[Shop sketch image]
*Whole Foods Market : Features1. Specialty for natural and organic foodsGood partnerships with vendors and suppliersMake a plan to open 1,000 stores in the U.S. in the future (CEO Walter Robb said)
2. Team Member HappinessRanked for 15 Years on FORTUNE's "100 Best Companies to Work For" ListProvides health care at no cost to full-time team membersAll employees (except temporary) are eligible to receive stock optionsHigh salary (ex: Associate Store Team Leader $80,199/annual average)
3. Satisfied and Delighted CustomersRely on word-of-mouth recommendations from the shoppersConnect with the customers through social media websites
*Features: Team Member HappinessFORTUNE's "100 Best Companies to Work For" List 2012http://money.cnn.com/magazines/fortune/best-companies/2012/
*Features: Satisfied and Delighted Customers1. Rely on word-of-mouth recommendations from the shoppersSpend much less on advertising and marketing, About 0.4% of the total sales in fiscal year 2010
2. Connect with the customers through social media websites, in addition to e-newsletters, the corporate website and blogOver 2.1 million followers on TwitterOver 780,000 fans on FacebookMany stores have set up their own Facebook and Twitter accountshttp://www.facebook.com/wholefoods
*Competitive Comparison in Financial StatementWhole Foods Market
[Strength]Higher revenue growth rateMuch higher margin
[Weakness]Very high P/E ratio Source: Yahoo finance Direct Competitor Comparison (as of January 23, 2012) Competitor: Kroger, Safeway
[Strength]Big enterprise scale
[Weakness]Lower revenue growth and lower margin, even less than the industry average
Whole FoodsMarketThe KrogerSafewayIndustry : Grocery StoresMarket Cap:13.66B13.87B7.65B8.53BEmployees:48,200338,000180,00081.00KQtrly Rev Growth (yoy):12.2%10.3%7.1%11.4%Revenue (ttm):10.11B88.99B42.84B10.11BGross Margin (ttm):35.0%21.7%28.6%25.6%EBITDA (ttm):844.24M3.94B2.38B844.24MOperating Margin (ttm):5.5%2.6%2.9%3.9%Net Income (ttm):342.61M1.18B529.00MN/AEPS (ttm):1.931.941.481.6P/E (ttm):39.4412.4515.0718.05
*Whole Foods Market: Stock Chart (for 2 years)The stock price (WFM) is going up with some fluctuation.Source: Yahoo finance (as of January 23, 2012) Raises FY 2011 Guidance; Raises FY 2011 Comparable Store Sales GuidanceRaises FY 2011 EPS Guidance
*Stock Chart Compare to Major Supermarkets (for 2 years)WFM stock price increased by over 150% (even though Costco increased by 50%)Other competitors stock prices fluctuated or remained steadySource: Yahoo finance (as of January 23, 2012) Whole Foods (WFM)CostcoKrogerWal-MartSafeway
*Conclusion:Q1: Is Whole Foods Market undervalued or overvalued ?
My opinion : In the long-term view, valued price
Analyst opinion is belowSource: Yahoo finance as of Jan.25, 2012, Data provided by Thomson/First call
Price Target SummaryMean Target:$77.82Median Target:$80High Target:$90Low Target:$62
*Conclusion:Q2. Now is it a good time to buy Whole Foods Market ?
My opinion: Yes! Why?1. Organic foods sales growth ($26.7 billion in 2010