Whole Foods Market Company Analysis

Whole Foods Market Company Analysis

Carrie Spisak

MGT 300-103

October 22, 2013

Introduction

Whole Foods Market is a natural and organic foods supermarket chain that was founded in 1980 by John Mackey, Renee Lawson Hardy, Craig Weller, and Mark Skiles (Marketline, 2013). Whole Foods headquarters is in Austin, Texas. In the 33 years since inception, Whole Foods has become one of the largest natural and organic food retailers in the United States.  Most of this positive growth can be attributed to many acquisitions over the years. They currently own and operate 335 retail stores in the US, District of Columbia, Canada, and the UK (Marketline, 2013). According to CNN Health, Whole Foods Market was rated number one on the America’s healthiest grocery stores list.

Financial Analysis

        Whole Foods Market operated well in fiscal year 2012 and it looks very promising for fiscal year 2013 (Fortune 500, 2013). The company is ranked 232nd in the Fortune 500 with a revenue of $11,698,800 with a fiscal year ending on September 30th, 2012 (Fortune 500, 2012). Whole Foods Market’s Current Ratio is 1.80.  It is calculated by taking the current assets divided by the current liabilities. The Return of Assets ratio for Whole Foods Market is 10.35. It is calculated by the company’s net income divided by the total assets. Their Debt-to-Equity ratio is .71. It is calculated by the Total Liabilities divided by the Total Equity.  Lastly, Whole Foods Return on Equity ratio is 27.6 and is calculated by the Net Income divided by the Total Equity.  

        Whole Foods Market belongs to the Food and Beverage industry according to the NAICS. Some of Whole Foods competitors that are part of this sector include Kroger, and Trader Joes. The Current ratio Industry average is 1.02 (Reuters, 2013) which measures a company’s liquidity. Whole Foods Market’s Current Ratio is .80, therefore in comparison with the Food and Beverage Industry Whole Foods Market is doing very well. The leverage of the company is measured by its Debt-to-Equity Ratio. In comparison with the Industry average Whole Foods Market has a competitive edge over other companies in the industry. The Return of Assets and the Return on Equity ratios gives information about the profitability of the company, the higher the number the better the company is doing. The Return of Assets Industry Average is 4.64 (Reuters, 2013). The Return on Equity Industry average is 12.26 (Reuters, 2013). In comparison to its competitors and the Industry average, Whole Foods Market is doing great (Appendix B).

Issue

Some of the major issues Whole Foods Market faces are the top-dollar reputation they hold and more competitors are carrying organic or natural alternatives.  There is the reputation that has been assigned to the Whole Foods Market is that it is too expensive for the average consumer and giving the competitors the opportunity to take this business from them. A nickname like “Whole Paycheck” will make it tough to draw in a new demographic, since lower-priced competitors are homing in on the fresh-food fad (Gasparro, 2012).  Whole foods has spent a lot of time trying to convince the middle market consumers that it is not just for Chief Executive Officers and affluent soccer moms (Stock, 2013). But broadening the chain’s appeal to customers with a wider range of incomes, education and ages has its drawbacks, core customers at Whole Foods spend, on average, nearly three times more than new customers, the company said (Gasparro, 2012).