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Whole Foods Market, Inc. (WFMI)

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NASD \ Services \ Grocery Stores

Whole Foods Market, Inc. (NASDAQ: WFMI) is a food retailer of natural and organic products including produce, seafood, grocery, meat and poultry, bakery, prepared foods and catering, beer, wine, cheese, whole body, floral, pet products and household products. The company also sells a selection of conventional national brands.^[1] The company is considered a socially responsible business.^[2] As of November 2006, consisted of 188^[3] locations in the United States, Canada, and the United Kingdom.

1 Company's Business
2 Company Analysis
3 Recent developments
- 3.1 John Mackey has been posting in Yahoo! message boards under "Rahodeb"
4 News Feed
5 Risks
6 Research Links
7 Options
8 Notes

Today

Max

Funds w/ WFMI:	76
Rank:	276 / 351

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Company's Business

Whole Foods Market, Inc. believes it is the largest food retailer of natural and organic products. Its stated mission is to promote the vitality and well-being of all individuals by supplying the highest quality, most wholesome foods available and the promotion of organically grown foods, food safety concern, and the sustainability of our ecosystem. WFMI is a Austin, Texas-based and opened its first store there in 1980. It completed its IPO in January 1992. As of September 24, 2006, it operated 186 stores organized into 11 geographic operating regions, each with its own leadership team: 177 stores in 31 U.S. states and the District of Columbia; three stores in Canada; and six stores in the United Kingdom. Its sales have grown rapidly through new store openings, acquisitions and comparable store sales growth, from approximately US$ 92 million in fiscal year 1991, excluding the effect of pooling-of-interests transactions completed since 1991, to approximately $5.6 billion in fiscal year 2006, a compounded annual growth rate of approximately 31%. It is a Fortune 500 company, ranking number 449 based on its fiscal year 2005 sales of approximately US$ 4.7 billion. Its stores average approximately 34,000 square feet in size and approximately US$ 31 million in annual sales. Its stores are supported by regional distribution centers, bakehouse facilities, commissary kitchens, seafood-processing facilities, produce procurement centers, a national meat purchasing office and a specialty coffee procurement and roasting operation.^[4]

WFMI aspires to become an international brand synonymous with not just natural and organic foods, but also with being the best food retailer in every community in which it is located. It believes its heavy emphasis on perishable products is helping it reach that goal, differentiating its stores from conventional supermarkets and enabling it to attract a broader customer base. Perishable product sales accounted for approximately 67% of its total retail sales in fiscal year 2006. It believes that all shoppers, not just natural and organic food shoppers, appreciate great produce, dairy, meat, seafood, bakery and prepared foods, and it is its strength of execution in perishables along with its customer service that has attracted many of its most loyal customers.^[4]

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Company Analysis

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Recent developments

On February 21, 2007, WFMI announced an offer to purchase Wild Oats Markets, Inc. (OATS), for about US$ 565 million, a nearly 18% premium on its closing share price. On a conference call with analysts, WFMI said it looked at making a deal with Wild Oats about six years ago, but the timing was right now. "We tried to pay the lowest price possible and they tried to get the highest price possible and we compromised on it," said CEO Mackey. "We had seen continued operating improvement by Wild Oats in the last few years. These guys were definitely getting better. They were getting to be a stronger competitor, they were doing a much better job ... we thought it was a good time to take a look at it." The two companies have significant duplication in overhead and corporate officers, Mackey said, which would help in cost-cutting as the deal was integrated over the next two years. "We can put jet propulsion under a lot of the stores in the next year or two, and get a lot of those comps (same-store sales) into the double digits," he said. Mackey also said that Wild Oats has seen some shuffling of its top management and the company was in transition and it was a good time to approach the company. The integration of the deal could make results "a little bit messy" for a quarter or two," but the synergies from the deal will appear in a year. The transaction, which was expected to close in April, would be funded at closing with US$ 700 million of senior term loans. WFMI also said it planned to increase its long-term senior revolving credit facility to US$ 250 million. WFMI also said it expects to make significant investments in remodeling stores before eventually re-branding them as Whole Foods Market stores. Ron Burkle's Yucaipa Cos. is Wild Oats' largest shareholder with about 18% ownership, and has committed to tendering its shares.^[6] The CEO thinks that the OATS' deal will satisfy its earnings hunger. WFMI's 11 operating regions will gain stores in three of its smallest regions -- Pacific Northwest, Rocky Mountain, and Florida. He also believed the deal will give WFMI access to new markets.^[7]

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John Mackey has been posting in Yahoo! message boards under "Rahodeb"

On July 12, 2007, Wall Street Journal reported that between 1999 and 2006 Whole Foods' CEO has been posting on Yahoo! message board as Rahodeb, which was confirmed by the company. The disclosure became public as part as part of FTC's lawsuit to block Whole Foods acquistion of Wild Oats (OATS). His comments were mostly positive on Whole Foods' stock and sometimes negative towards its competitors, like Wild Oats. ^[8]

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News Feed

10/11/08 12:10 am	Power Point: Be the change (at Fortune)
10/10/08 8:10 am	Lanny and Ted's Excellent Antitrust Adventure (at The Wall Street Journal Online)
10/09/08 3:10 pm	3 Reasons to Sell Starbucks Now (at Motley Fool)
10/09/08 9:10 am	Whole Foods Market, Inc. to Webcast Fourth Quarter 2008 Earnings Conference Call (PR Newswire)
10/07/08 4:10 pm	Safeway affirms 2008 targets but tightens purse strings (at MarketWatch)
10/07/08 12:10 pm	UPDATE - Safeway quarterly profit rises, shares up 5 pct (at Reuters)
10/06/08 11:10 am	Grocers fall amid Wall Street sell-off (AP)
10/06/08 7:10 am	A High School Senior Sells Into Wal-Mart (at BusinessWeek)
10/05/08 4:10 pm	[video] How to Retire in This Market (at TheStreet.com)
10/03/08 9:10 am	Filling the grocer cart costing 10.5% more (at MarketWatch)