WFM has remained relatively steady since it’s heavy drop post-earnings in May. Competition has been increasing in the organics and natural food business. This is generating slowing sales growth and margin pressure for Whole Foods. As I have previously discussed, management has reduced its forward guidance over the last three consecutive quarters.
The company is still forecasting sales growth of between 10.5% and 11% in the coming quarter. WFM acknowledges that growing competition is becoming a problem, and they are planning to overcome this with lower prices and an enhanced customer experience.
WFM raised its long-held expansion goal from 1,000 to 1,200 stores in North America. In addition it has a number of very positive initiative that should help them marginally: a loyalty program, technology driven programs (mobile apps, home delivery etc), new small-scale stores and food quality differentiation.
There are even speculation that Publix Super Markets (private) was looking to potentially purchase Whole Foods.
Earnings to be released at the end of the month. It will be interesting to see what the stock does with the upcoming earnings release. for now, my sentiment is to HOLD.