Whole Foods Market Finance Analysis Essay

1198 WordsFeb 3, 20115 Pages
Whole Foods Market Financial Analysis Whole Foods market generated $8.0 billion in sales in fiscal 2009, an increase of 1.0% over the previous years. Yet in fiscal 2009 same-store sales were down 4.3% over the previous years. Operating income for Whole Foods was $284.3 million in fiscal 2009, up to 20.4% over the previous year. This improvement was largely due to stringent cost-containment measures that Whole Foods put into place in the face of the recession economy. The ratio comparison in table in the appendix suggests that Whole Foods Market inc. is in good shape financially, healthy company. Whole Foods market is liquid company; it has high liquidity- strong cash flow to cover its debts and future projects. Our analysis of Whole…show more content…
Sales growth over past five years exceeded 15.8%. Thus, sales declined from 2008 and were only one percent in 2009. Also, net profit margin significantly dropped from 3.5 % the highest to 1.4 % in 2008 and now it went up to 1.8 %. But company generated positive cash flows from operating activities. By comparing Whole Foods market to its competitor Safeway Inc., we can conclude that Whole Foods uses effective marketing strategies and financial management (flexible adjustment with current economic, political situation; adjusted differentiation market strategy to cost leadership strategy). Safeway had huge losses-around 8%, it had negative cash flows in 2009 and its debt ratio is very high-88%. Whole Foods return on assets for 2009 was 3.8%, compare to Safeway (-6.8%). This shows that Whole Foods is able to charge higher prices for their products, which one is of the advantages of selling organic foods. According to L. Sandberg, consumers in the organic industry are not really looking for the best price, but instead the best quality. Research has shown that “the retail grocery market is typically considered somewhat resistant to economic downturns, thus, to some degree; consumers’ food budgets are price insensitive” (Lytel). We believe in the future Whole Foods market will pick up again and its sales and profits will rise at expected, forecasted target level. Despite the fact that Whole Foods market did not reach its target

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