Now that Whole Foods (WFMI) is trying to position itself as the reasonably-priced retailer it claims it has always been, the stock’s dividend may be in for a cut as well.
The stock has tanked about 60% from its 52-week high, so the dividend yield is 3.7%. But analysts are rumbling that Whole Foods, which reports after the bell today (Tuesday, August 5th), should make other changes as well. If it does not cut its dividend, many analysts want the premium retailer to:
- save cash by slowing store expansion growth in 2009
- make a concerted effort to point its customers toward value-oriented offerings
Does WFMI actually have “value” to point its customers toward? Yes, says the WSJ:
While Whole Foods is ostensibly a consumer staple (a company that performs in a down economy because consumers must shop for food), the reality is that “the shares actually trade like a consumer discretionary stock,” says Mark Miller, at William Blair & Co. Stock analysts who have done apples-to-apple comparisons report that Whole Foods, despite its image, is competitive on prices.
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