Oh crap

[Jenise]

Just read on Fortune.com that Whole Foods is going to try to unearn the nickname 'Whole Paycheck' by opening a new chain that's essentially a lower end version of itself. Same store sales were only up 3.6% in the last period they measured vs. 5.3% expected on the Street. A number of sites have been selected and they'll start opening stores next year.

Well, combine that with the news that Bellingham (the nearest town to me) is going to get a Whole Foods. The site they're moving into was gutted and rebuilt by another (failed) market just 3-4 years ago, complete with a pizza oven and a very large serving/warming/kitchen area for to-go food, so very little infrastructure renovation is required to make it a Whole Foods kinda place and we've all been scratching our heads over the announcement that the opening was all of 18 months out.

Well, maybe now we know why. I'll be pretty pissed off if they give us a Whole Foods Lite. We don't need another average supermarket. Safeway just opened in town and Haggens has 5 or 6 locations. We also have two Fred Meyers (Kroger, like a Ralphs with clothing and hardware). Those are all average markets. We need one place, JUST ONE!, that caters to people with higher standards and more adventurous ideas about food. If they dumb it down, they might not be competitive.

We have a Sprouts near us which is (I think) an attempt at a lower-end Whole Foods type of place. They have tons of vitamins and supplements, a horrid wine section, average produce, and basic meats. (Although they do have a wide array of frozen game products.) The bakery stuff is not good, the deli sells mostly Boar's Head stuff, and they have weird Buddhist and Paleo diet magazines by the checkout counter. We go there for basic produce, the organic milk, and the Talenti gelato (because they always have it on sale). In short, there's next to nothing there for people who have more adventurous ideas about food. I hope that WF does better than that if they open a stripped-down market near you.

[Jenise]

Yes, Sprouts and the like are part of the problem. There's a Sprouts in Thousand Oaks that I've been into once or twice. Not an attractive or enjoyable store and not on the surface recognizable as a WF challenger, though they occasionally have something no one else has per my friend who lives there.

Per a rag associated with investor Jim Cramer:

"The obvious answer is that there is an increased amount of competition in the organic and natural food space, which has reduced traffic and lowered prices. What used to be a niche corner of the market has been adopted by the masses, even as Wal-Mart (WMT) and Target (TGT) get in on the action.

So yes, the competition and cannibalization of new stores created Wednesday's number.

But what if there is more to the story?

"The bigger issues is that perhaps same-store sales just isn't the metric we should be using to grade Whole Foods," Cramer added.

Honestly, if this were the only number that were used to value Whole Foods versus the competition, then Cramer thinks the stock would be cut in half.

But when he considers the fact that the company generates $720,000 a week per store, let alone its immense growth potential, then Cramer has to question if it's really worth only $9 billion?

"I think the opportunity is way bigger than that market capitalization."