Whole Foods is determined to keep growing through the recession. Despite another weak quarter in which same-store sales growth collapsed, the company still considers itself a growth company with plans to keep opening new stores, about 15 in the next year.
In a research note, FBR analyst Karen Short slammed WFMI management’s “disregard” shareholders, and said the company should cease opening new stores completely.
What kind of headwinds is the company facing? Just this past weekend, the New York Times took a look at the organic food markets and found that — surprise — the recession may prompt customers to switch back towards traditional agriculture:
While a group of core customers considers organic or locally produced products a top priority, the growth of recent years was driven by a far larger group of less committed customers. The weak economy is prompting many of them to choose which marketing claim, if any, is really important to them.
Among organic products, those marketed to children will probably continue to thrive because they appeal to parents’ concerns about health, said Laurie Demeritt, the president and chief operating officer of the Hartman Group, a market research firm for the health and wellness industry. But products that do not have as much perceived benefit, like processed foods for adults, may struggle.
Bear in mind that th market already knows all of this — Whole Foods is off nearly 80% from its year highs. The question is whether their assessment for business (that it can grow) is correct, or whether it stands to do more damage by not hitting the brakes.
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