Whole Foods Market Inc. (NASDAQ: WFM)
WFM Earnings Report and Reaction
Shares of the once highly popular and mainly organic health food grocer ,Whole Foods Market, reported its fiscal third quarter earnings that investors, analysts and speculators nearly choked on after the close on Wednesday, July 29th 2015. Shares traded down instantly in the aftermarket trading session and opened for trading Thursday morning at 9:30 am EST giving the first opportunity for average investors to place their sell orders to get out of the shares. Some professionals were privileged to have exited right after the earnings came out but they are usually the more advanced entities such as hedge funds and large accredited private traders. The shares finally closed at 4pm EST Thursday at $36.08, down $4.74 or (-11.61 %). The trading volume was enormous for Whole Foods, which normally trades about 5 million per day on a 3 month average according to Yahoo finance. The last time it traded anywhere near this volume was back on May 7 when it also had disappointing earnings to announce.
The Company reported quarterly revenue of $3.6 billion, up 8% year over year but about $60 million shy of the average analyst estimate. Earnings per share came in at $0.43, up from $0.41 during the same period last year, and two cents short of analyst expectations.
Whole Foods Market Analysts Downgrades and CEO Comments
Adding insult to injury, the company also received two downgrades by analysts that cover the stock. Morgan Stanley, which is a commonly known household Banking firm name, lowered their rating from overweight to equal-weight. The other analyst from WedBush downgraded to neutral from outperform and also lowered his price target. Ironically, both of these analysts’ new price targets are actually higher than where the stock closed today which are $38 and $40 respectively.
Management cited various reasons for their poor performance with not just one in particular that made the most impact. Some of the ones mentioned are as follows: a more price sensitive consumer, price deflation in certain categories and the negative media attention the company received after the New York City consumer affairs of weights and measures determined in an audit that the company repeatedly overcharged its customers
The two charts show are of the daily price chart and one of the weekly price chart. Notice the head and shoulders pattern on the weekly which normally results in much lower prices. If this pattern resolves according to statistics, Whole Foods may have much lower to go. On the daily chart please notice green arrows indicating the price down gaps and huge volume.
About Whole Foods Market
Whole Foods Market, Inc. (Whole Foods Market), incorporated on August 15, 1980, is a retailer of natural and organic foods and grocer. The Company has one operating segment, natural and organic foods supermarkets. As of September 29, 2013, Whole Foods Market operated 362 stores in the United States, Canada, and the United Kingdom. The Company’s offices are supported by its headquarters, regional offices, distribution centers, bakehouse facilities, commissary kitchens, seafood-processing facilities, meat and produce procurement centers, and a specialty coffee and tea procurement and roasting operation.
Whole Foods Market offers a selection of natural and organic products with an emphasis on perishable foods. The Company’s product selection includes grocery, meat, seafood, bakery, prepared foods and catering, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins, body care, and lifestyle products including books, pet products, and household products. The Company’s 365 and 365 Organic Everyday Day Value brands account for approximately half of its brand items. Additional brands include the Whole family of brands, such as Whole Foods Market, Whole Catch, Whole Fields, Whole Pantry, Whole Living and Whole Paws, Allegro Coffee, Engine 2, Wellshire Farms, and Nature’s Rancher. Health Starts Here is an approach to healthy eating rooted in four simple principles to build better meals: Whole Food, Plant-Strong, Healthy Fats, and Nutrient Dense. Whole Foods Market is dedicated to promoting animal welfare on farms and ranches. Reuters