Whole Foods (WFMI), the premium organic and health food retail chain, is down around 9% in early trading after a weak Q1. Get ready for more of the same.
We’ve argued that although there is no real food-price “crisis” in the US, higher food and commodity prices coupled with a dour economic picture could cripple Whole Foods. And this quarter at least, we were right. Whole Foods’ first quarter profit dropped 13%, missing the Street consensus (largely, it must be said, on higher expenses related to integrating Wild Oats).
Goldman Sachs analyst Simeon Gutman slashed his price target on Whole Foods from $45 to $39. He also dissed the stock as “unattractive” and pronounced WFMI a business “in transition.”
“Transition” is the right word. The integration of Wild Oats isn’t going well (or at least without its costs) and the global food price and economic outlook still is sour. For now, Whole Foods is standing by its Fiscal Year ’08 revenue projections, but it remains to be seen just how much better its food tastes than Wal-Mart’s (WMT).