Evaluation of Whole Foods Market

EVALUATION OF WHOLE FOODS MARKET 7

Evaluationof Whole Foods Market

Startingand being able to run a successful business needs as certain kind ofmettle which only a few firms can be able to master and that wouldneedthem to come up with survival strategies. The strategies may manifestthrough someavenues andthis they canbeat the market forces. Whole Foods Market is one such entity thathas been able to beat the market and emerge as the victor. Thecompany chose to wander into unknown territories when the field oforganic foods was not such a developed area and many entities wouldhave liked to avoid it. The company was able to beat all odds andbecome a successful venture thatwould later belistedamong the Fortune 500. The following report will seek to unravel themystery behind the success of the reckoning force in the organic foodbusiness.

Thecompany as mentioned above is one that chose to venture into thefield of organic food manufacturing. The entity wasopenedin the city of Austin, Texas which saw the birth of a great companyand the city still seats as its headquarters. The bodyopened its doors in the year 1980,and it has seen tremendous growth as well as varied challenges todate (Tillotson,2006).The success of the entity can beconsideredin the fact that bythe current yearit has been able to grow from a single store and now owns 431supermarkets all over the globe. That shows that it has turned frombeing a local store to a multi-national corporation that has a say onmatters organic. It wasincorporatedinto the Fortune 500 in the year 2005 and is said to be the 30thlargest retailer in the whole globe.

Theimmensesuccess of the company would mean that they have to undertake certainstrategies to ensure that they canbeat any realcompetition. In 1984,they chose to move out of their comfort zone which was Austin andwere able to moveto Dallas as well as Houston,and that came with their initial acquisition thatwas Whole Food Co in 1988 (Tillotson,2006).That set in motion a chain of activities which would see them acquiremore natural food chains through the 1990’s. Theiracquisition program continued to grow until the year 1999 when theywere able to open their 100thstore in Torrance, California. They also acquired Natural Abilitiesin the year 2000 as well as continue expansion into North America inthe year 2002. Stores wereopenedin Hawaii in the year 2007 as well acquisitions in 365 Everyday Valueas well as Allegro Coffee in 1997 (WholeFoods Market, 2015).The expansion program was to continue into the United Kingdom wherein 2004 they entered the market by acquiring seven fresh and wildstored and what their breaking point in the journey. In 2007, itopened its first full-sizestore thatwas 80,000 sq ft and wassituatedonKensington High Street in West London,and that meant that they had set a place for themselves in thecountry. In 2008, they faced financial troubles and that nearly speltdoom for the company since they were forced to reduce to four storesin the United Kingdom (WholeFoods Market, 2015).

Inthe year 2011 they were able to recover in their global markets andtheir sales increased by 8%. One major Acquisition that set theentity from its competitors is the merger that went down with WildOat Markets. The acquisition saw them get the entity’s common stockat cash tender offer of $18.50 per share where they paid a combinedamount of $565 million. They also took up a debt of $106 million inthe process and that solidified their position in the organic marketfurther (WholeFoods Market, 2015).

FinancialIndicators

Thefollowing table shows the entities financial indicators such as theearning per share and the share price as well asothers.

Financial Item

Performance Indicator

Share Price

$30.01

Dividend

$0.52

EPS

$1.49

Current Yield

1.72%

Share Volume

1,927,820

Theshare price that isindicatedinthe table above relates to the current period since the firm’sstock is trading at a cost of $30.01 which meansa $0.18 drop in the stock value and that amounts to a 0.60% drop. Theearnings per share also show that each shareholder canget a return on investment of $1.49 which shows that the entity is ona relatively stable path on matters relating to attracting investors.Measuring the firm’s size is not easy since nosingle test canclassify an entity as either large or small. One would need to relyon the performance of the organization as shown below when comparedto similar groups.

Thefollowing comparative table displays a comparison between thebody and two other companies in the fieldof organic as well as inorganic foods thatcan be said to be competitors.

Financial Item

Whole Foods

Kraft Heinz

Tyson Foods

Share Price ($)

18.50

73.28

44.33

Volume traded

1927820

1345000

3900000

Dividend ($)

0.52

0.58

0.1

Yield

1.72%

0.90%

3.14%

EPS

1.49

-1.14

2.67

Thetable helps give a graphical comparison of all the firms consideringhow they are performing regardingtheir share. The companies involved in the above comparison allbelong to the Fortune500 hence they are competitors and so far Whole Foods Markets seemsto surpass the others regardingperformance. However, it is defeated by Tyson Foods regardingearnings per share and by Kraft Heinz regardingshare price. Whole foods cantrade more shares as opposed to Kraft Heinz but less that Tyson Foods(TysonFoods, 2015).The performances by the entities may beinfluencedby the markets they serve as well as the market shares that theyenjoy in their respective fields.

Onewould also need to look at the entity from a point where one analysesthe strengths, weaknesses, opportunities and the threats. The entityhas its principaladvantagesin the fact that it controls a substantial financial base that canable it get the better of its competitors. They also have anemployee culture that ensures that the workers understand that theyare valued and that they are within their capacities to make theentity excel (WholeFoods Market, 2015).They have someweaknesses thatprimarilythat a few internal factors need to beaddressedif they are to succeed. One of their weaknesses is the premiumpricing thatmainly focuses on the richfolks. That would mean that they lose their customer base in casethere is a recession thatmay hurt those in white collar employment.

Onewould need to look at the performance of the organization,and that would give them a feeling of whether it needs to undertake amake or a buy decision. Considering the type of industry that theentity is in which is a sensitive market, it would have to adopt themake decision. That will give it the chance to make the foods andblend them in the best way to ensure they can beat their competition.Adopting the buy decision would leave them at the mercy of thecompetitors since they would be able to live up to customerexpectations.

Theyalso enjoy opportunities regardingnew markets such as Asia as well as South America,which are yet to beexplored,and those could yield profits. They also enjoya chance to exploiteco-industrialization since they have already done away withplastics,and that would mean they are ecologically conversant (Tillotson,2006).They also face threats regardingnumerous court and legal battles that may hamper their developmentagenda.

Thereport above seeks to look at a company that islistedamong the Fortune 500 in a bid to seewhat makes it a success. The report looks at the financial indicatorswithin the firm as well as comparing the same to other players in themarket. The report finally looks at the entity’s strengths,weakness, opportunities, and threats.

References

WholeFoods Market. (2015). WholeFoods Market | America’s Healthiest Grocery Store.Wholefoodsmarket.com.Retrieved 19 November 2015, from http://www.wholefoodsmarket.com/

TysonFoods. (2015). TysonFoods Inc. Cl A.Marketwatch.com.Retrieved 19 November 2015, fromhttp://www.marketwatch.com/investing/stock/tsn

Tillotson,J. (2006). Whole Foods Market. NutritionToday,41(2),67-69. http://dx.doi.org/10.1097/00017285-200603000-00006