Whole Foods Market Comparative analysis report by: rebekah Leybold

Introduction

  • Industry leader for grocery stores in the natural and organic food industry
  • First national "Certified Organic" grocery store
  • Main goal is to “promote the vitality and well-being of all individuals by supplying the highest quality, most wholesome foods available” (Whole Foods Market, 2015)

Comparison

  • WFM increased sales to $15.7 billion
  • Kroger and Sprouts Farmer’s Market had the advantage of having lower prices compared to WFM
  • However, WFM represents issues that people care about, such as local suppliers, animal welfare and sustainability, as well as the advantage of brand name and scale

Strengths and Weaknesses

  • WFM has an advantage because they pay for store expansion almost exclusively by using free cash flow (Stoffel, 2016).
  • Whole Foods has more financial fortitude than its competitors, with a better cash-to-debt position
  • Main weakness is the fact that they have higher prices than their competitors
  • Priorities for WFM in the upcoming year are to increase sales growth by 2.5% or higher, obtain a diluted EPS of $1.42 or greater and strive for ROIC of 11% or greater (WFM, 2016).

ROA and ROCE

  • In 2016, WFM had a return on assets ratio of 8.39%, while the industry average was 10.78%
  • ROA for Kroger in 2016 was 6.33% and Sprouts Farmers Market at 8.61%
  • ROCE: WFM had a ratio of 17.14%, Kroger calculated to be 15.14% and Sprouts had the highest of 19.13%.
  • In comparison to the industry averages, WFM is performing sufficiently.

Conclusion

  • Whole Foods Market sees a growing market opportunity as their customers are showing greater interest in what they eat and where their food is coming from
  • "embraced the responsibility to nourish the health and well-being of people and the planet by being the authentic purveyor of food for the greater good” (WFM, 2016).

references

  • Whole Foods Market. (2016). Annual Report 2016. Retrieved March 22, 2017, from http://s21.q4cdn.com/118642233/files/doc_financials/2016/Annual/2016-WFM-Annual-Report.pdf
  • Stoffel, B. (2016, October 05). Better Buy: Whole Foods Market vs. Kroger. Retrieved March 22, 2017, from https://www.fool.com/investing/2016/10/05/better-buy-whole-foods-market-vs-kroger.aspx

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