Take a look at this fascinating opinion piece from the investment site Motley Fool. It correctly identifies the problems with Whole Foods and its reliance on national brands as well as the potential for the retailer to differentiate with private brand.
Whole Foods Market, Inc.’s Worst Business Segment in 2015
In what’s proved to be a tumultuous year for Whole Foods Market (NASDAQ:WFM), is it possible to identify the company’s worst business segment in 2015? The task is more difficult than it may seem at first blush, as Whole Foods reports its results under just one operating segment.
Yet, as I wrote in the companion piece to this article, Whole Food Market’s Best Business Segment in 2015, we can still replicate the various ways in which management looks at its operations internally. As an investing exercise, let’s name what, in an alternate universe, has already been crowned the grocer’s worst business segment in 2015: name-brand natural and organic packaged goods.
As the year wore on, Whole Foods’ management faced the fact that competition from larger grocers, including Kroger Co (NYSE:KR) and Wal-Mart Stores (NYSE:WMT), was a primary factor behind the company’s falling comparable-store sales versus simple self-cannibalization from new store openings. During the company’s fiscal fourth-quarter earnings call in November, Co-CEO John Mackey singled out the grocer’s need to communicate its differentiation more forcefully to its customer base.