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Whole Foods Misses, Lowers Guidance, Or What Happens When You Ignore Buybacks At The Expense Of CapEx (Hint: -10%)
While we recently roasted IBM for engaging in an unsustainable debt-funded buyback program, in which IBM has used every dollar of debt issued since 2012 to buyback its stock, moments ago another company showed why management teams would much rather buyback their stock than invest in CapEx in a market that only reward instant gratification in the form of shareholder friendly activity and furiously punishes any attempts to grow for the future.
Presenting Whole Foolds: the luxury grocery chain moments ago reported revenues of $3.32 billion, missing the $3.35 billion expected, and EPS which also missed expectations of $0.41, instead printing at $0.38. Adding insult to injury, WFM also cut comp store sales guidance lowering its previous fiscal year comp store guidance from 5.5%-6.2% to 5.0%-5.5%, cutting sales growth from 11-12% to 10.5%-11%, and also cut EBITDA from $1.32-$1.37 billion to $1.29-$1.32 billion.
So yes - sadly for WFM, unlike every other company, it took no charges, and had no add-backs to add to give a far rosier non-GAAP EPS number, which in itself is admirable. And while we commiserate with having a weaker consumer to sell to, that too was perfectly expected now that the economy now only ground to a halt but in Q1 declined.
That said, WFM continues to be a cash cow, generating tremendous amounts of bottom line cash.
Which perhaps was its biggest failing as well - WFM reported that "year to date, the Company has produced $619 million in cash flow from operations and invested $362 million in capital expenditures, of which $207 million related to new stores. This resulted in free cash flow of $257 million. In addition, the Company has paid $82 million in quarterly dividends to shareholders and repurchased $117 million of common stock."
Alas, this is nowhere near enough shareholder friendly activity to keep investors happy in a New Normal in which buybacks tend to be far greater in amount than CapEx spending. What's worse, in order to make up for organic growth, WFM would have no choice but to expand its stores and not only is projecting that the number of new stores would rise from 33-38 to 36-39, but is also expecting a $75 million increase in CapEx from a prior guidance of $600-$650 million to $675-$725 million.
Which simply means that between lower EBITDA and higher growth CapEx, Whole Foods will have far less cash for even more buybacks in the future.
End result: the stock is now -10% after hours.
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MMM KALE.. and HFT - – David Einhorn: WOULDN’T CALL STOCK MARKET RIGGED,
http://hedge.ly/1mzei8L
Was o playin golf?
PE 29....for a fucking over priced grocery store. ...waaaaaaaaa
Whole Foods has nice products. It is WAY overpriced though. Who is dumb enough to go there when you can get similar quality food at other (horror) retail grocers? Yeah, crash you hippie POS.
Aldi has some great organic products for about half the price of anything at Whole Paycheck. Just look for the Simply Nature brand. Some great stuff if you ask me.
Aldi is GREAT ,, and they do it with a lot of their own branded food ... it's my first and biggest stop when buying food ... I use other stores for the few items Aldi doesn't carry.
It really is getting real at the Whole Foods parking lot:
http://www.youtube.com/watch?v=2UFc1pr2yUU
By the way, grocery stores & restaurants are still doing okay on weekends, but it's becoming more and more clear to me that discretionary spending during the week continues to recede, and retail is just in a miserable place right now.
I believe we're witnessing a dramatic shift in consumer spending whereby spending on necessities is now infringing upon/robbing from discretionary spending in a significant manner, and that this is now a structural (i.e. permanent) change, as the middle class suffers and shrinks, and the increasingly smaller pool/number of Americans formerly known as "the middle class" completely realigns their spending.
One of my retail bellwether indicators is Costco's parking lot "fullness index," and for the first time that I can ever remember (even immediate
post 2008), I'm seeing many more parking spots in Costco's parking lot even during peak shopping hours during the week.
This credit/debt bubble that central banks have re-blown is absolutely crushing the "65% of economic activity is consumer spending" adage, and when what is now obviously a financial bubble pops, NOONE will say "it looks like central bank monetary policy did permanent damage to the 2/3rds of economic activity is consumer spending driven model."
nailed it. I was lagged by earnings day but yes, drop the mic, you earned it Truth.
i think they suck (Aldi)
Regular or Discount Retail isn't going to have loads of ass that you could bounce a quarter off of clad in lululemon walking about. That's WF's value prop for guys.
Is SNAP not accepted at Whole Paycheck?
"Whole Paycheck"...That's fucking hysterical.
Walked into one a Brooklyn, laughed my ass off and then walked out. When my dollar is only worth half of what it was just a few years ago, I don't give a shit what the cows name was.
I could have paid cash for a beach condo with all the money the old lady spent there
Yes, but now the old lady will live just as long as the old japanese mountain goat.
Losers ! ..... the peeps are out looking for the cheapest cans of Alpo .
Luxury food is a great con while it lasts
I guess organic-soy-alfalfa-wheatgrass-edamame-pine-nut shakes aren't as popular as they use to be. And to think they're only $17 each.
but they keep you regular. And they are so organic, you could probably eat your own poop afterwards.
Say hello to the death spiral WFM.
Fucking stock buy backs are a complete waste. All the "money" they spent propping up their price gets wiped out in nano-seconds.
You're saying propping up prices by borrowing money so you can buy your own stock at inflated levels isn't a sound idea? Who would of thunk it. Of course if you're the insider selling off your own stake at those inflated prices and you get to make the decision to inflate the prices, that may make more sense.
Long, long ago in my youth ,such things were verbotten.
No, that was an $800 per week up your nose job, the rest of the weekly money is yours.
Whole Foods: the grocery store equivalent of Coach bags.
Coach may be bad. Prada is worst. Italian prices & Chinese made lol.
They must have some pretty incompetent accountants.
The stench of sweat and patchouli fills the cubicles...
patchouli masks sweat
Do they accept EBTs WTF? Right, Right EBTs go further at Gov-mart! My Bad!
Fewer and fewer peeples can afford a $3.00 organic carrot.
In case anyone didn't notice, we are still looking at 10% real growth from this company. Whole Foods is doing well...don't kid yourself.
"Fucking stock buy backs are a complete waste. All the "money" they spent propping up their price gets wiped out in nano-seconds."
Not always. Stock buy backs are fantastic if the stock is incredibly underpriced. At very little cost, the company can reduce the number of shares in circulation so the remaining share holders get larger dividends in the future. Of course, that's not what companies have been doing. They've been buying the all time high. Coincidentally, insiders in almost every company are dumping their shares. The share buy backs are done so insiders can all jump out without causing the stock to crash.
It looks like Whole Foods needs to open Tesla kiosks in all their stores...The margins are much better in exotic cars.
/sarc
When I was around one I never really noticed much of a price difference in things I bought there. The 365 brand usually was price equivalent to other grocers. Of course once you get to the meat and deli all beats are off.
When Whole Foods went public, they became Wall Street's bitch.
Should have stayed private.
They are opening a Whole Foods in my Social Services, Section 8, Salvation Army, County Hospital, homeless bums, dark stabbing town.
You can walk to two supermarkets and a Trader Joe's and a decaying sleazy mall.
Just saying.
Whole Foods is ridiculous.
Hey, rahodeb, go fuck yourself.
So, the great hope of the banks and govrenments is that illegals immigrant will stimulate the economy,
Do they shop at Whole Foods Mercado?
...morons.
Whole Foods runs $60-100 per night for dinner
On the West Coast I see these brands merging: Wild Oats, Fresh & Easy (US).
Fresh & Easy (US) is good...just too bad the parent didn't keep them going.
Also like Sprouts.
there also is recent popularity in Smart & Final.
All good.
Laugh at them all you want. What other grocery store has a salad bar as good? Want to know why they lose money? Go in there any afternoon or Saturday morning and look at all the free samples. I can go in and eat my weight in free exotic cheese, fruit, and bread and special butter spreads, and whatever special things, i.e. brisket or coconut water are being handed out as samples. After stuffing my face shamelessly on freebies, then I can get Indian food, veggies, and other delicacies I would never bother cooking for myself from the hot and cold bar. Plus, find a grocery store with hotter chicks. Trader Joes mayyy have the edge. May.
Whole Paycheck's 'bad' numbers mirror the top and bottom line expectation misses that are spreading as the 100 year (or 60 or 35 year) U.S. credit binge continues it's rollover into an upcoming multi-decade credit, business and consumer spending collapse.
And WFM's chart shows the widespread, euphoric equity bubble top as well: a 1 year head and shoulders top, which as of tonight's after hours 13% gap down to 41 leaves a dramatic island gap top reversal which will require humpty-dumpty years or decades to ever be put back together again as an upward price resumption:
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=WFM&insttype=&freq=1&show=&time=9
Worse: the 10 year chart shows WMF is on its way down to temporary suppport at 40, then 30, then 20 and then 10 over the next 4-5 years or less. Think NAZ 2000-2002:
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=WFM&insttype=&freq=2&show=&time=13
Institutional equity buying, misguided and ill-fated 'federal' money printing, and the 'Extraordinary Popular Delusions And The Madness of Crowds' principle (AMZN $15.29) may have temporarily rendered the current bubble top invisible, but an analysis of today's massive WFM island top reversal, along with several other similar patterns, may portend the impending financial and psychological reversal, temporarily hiding in plain sight, but soon to be revealed in sharper investor focus.
My screens suggest a major spill on aisle 11 Wall Street...
they need to increase their fucking dividend
after reading through the comments it became apparent how many low rent fuktards are on this site.....
Whole Foods - this week, a 3" piece of wire in the gazpacho ...