At one point this morning, WFM was down about 4% on management comments from an investment conference that appeared to be guiding down 2012 sales from about 15% to 13%.
10:16am *WHOLE FOODS SEES SALES GROWTH OF 13% IN FY12
10:51am *CORRECT:WHOLE FOODS FORECAST MAY HAVE BEEN REITERATING MAY VIEW
11:23am *WHOLE FOODS SAYS THERE’S BEEN NO CHANGE TO ITS YEAR FORECAST
PHEW, disaster averted. Since management cleared this up the stock has rallied, even went up on the day shortly after, but now is down about 1% on the day.
What I find most interesting about today’s price action is that the stock is only about 2% from the all time intra-day high made this past Monday, and up almost 30% this year.
I think given WFM’s price point on most food items it is safe to say that they fall into the consumer discretionary space, rather than non-discretionary.
The stock has benefited from their near 100% revenue exposure in the U.S. and strong growth trends. To compare WFM to stocks like TIF and RL is kind of Apples to Oranges given their ~15% and ~20% exposure to Europe, and more in Asia.
BUT given investors recent caution towards the high end consumer, this is a trend that may start to move its way down the food chain (pun intended).
The company corrected the initially perceived guidance flap, they said it so I believe (not really), but I will make one point, that a stock like this is priced for perfection trading at 32x next years earnings that are expected to decelerate to about 15% from 28%.
The following chart is interesting to me as WFM and TIF had been trading in a very similar pattern right up until early this year, since there has been a massive divergence, largely on the issues mentioned above.[caption id="attachment_13126" align="aligncenter" width="589" caption="1 YR WFM VS TIF from bloomberg"][/caption]
I want to make one last point, TIF has been selling off on international exposure, but when the company reported disappointing Q1 results in late May, they specifically sited weakness in the U.S.
Whether u r shopping for overpriced organic Apples or Oranges at WFM, you may want to look at some other high end retail peers for a little instruction how things may go if we do get a real global economic slowdown.
NO TRADE HERE WILL TAKE ANOTHER LOOK ON A MARKET BOUNCE.