Money What This Whole Foods Acquisition Means for Wal-Mart and the Rest of the Industry

22:41  18 june  2017
22:41  18 june  2017 Source:   24/7 Wall St.

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The excitement might tick up on Black Friday when holiday shoppers hit. What This Whole Foods Acquisition Means for On one hand, if Amazon continues down a path of consolidation of lower-to-middle income brick-and-mortar grocery chain/discount stores, the risk to Wal - Mart is much greater.

However its guidance tanked the stock and also brought down the industry as a whole . The Whole Foods acquisition is a huge disappointment for Sprouts Farmers Market Inc. (SFM) on a couple of levels. Accordingly, we think today’s news 100% puts Sprouts into play with Wal - Mart and Kroger

  What This Whole Foods Acquisition Means for Wal-Mart and the Rest of the Industry © courtesy of Wal-Mart Stores Inc.

There was a major shock among grocery stores this past week that threw the industry on its head. Prior to the acquisition news, we speculated that this industry might be in trouble as the result of too much competition and margins too low. It just seems that there are too many sources for getting groceries.

Additionally, the advent of online grocery shopping is not helping. Food delivery services such as Blue Apron are acting like the cooking-show in a box for millennials, further deterring grocery shopping. Not to mention that all this is happening at a time when restaurants have all struggled to find their niches in a peak-store theme.

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What Amazon’s Whole Foods deal means for Australia. Wal - Mart is the biggest with 14.5 per cent share, followed by Kroger with 7.2 per cent. “It’s a big deal because of Amazon and what Amazon can bring to the game,” CFRA Research analyst Joe Agnese told AFP.

Amazon vs. Walmart : Bezos Goes for the Jugular with Whole Foods Acquisition . View all articles. In just the space of a few days, the retail world was shaken by two big acquisition announcements from the industry ’s goliaths: Walmart and Amazon.

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Whole Foods Market Inc

WFM

Amazon to buy Whole Foods for $13.7 billion

  Amazon to buy Whole Foods for $13.7 billion The online retailer is stepping into the physical retail world in a big, big way.The online retailer, which has spent the last few years toying around with experimental physical stores, said it has agreed to acquire Whole Foods Market for $13.7 billion, or $42 a share. The companies expect the deal to close in the second half of the year.

Amazon has a sterling track record of using its low-margin business to pull each industry it dominates into a deflationary whirlpool — meaning , if Whole Foods follows The future of this business model will completely repurpose brick-and-mortar centers, a logical continuation of the Wal * Mart revolution.

That was when we dissected Wal - Mart 's .3 billion acquisition of Jet.com. Austin, if you could roll But in terms of changes we might see -- let's say it's this time next year, and the Whole Foods Shen: Thanks Fools for tuning in. The rest of the Industry Focus crew will share their "We said what

42.68
+9.62
+29.10%
Wal-Mart Stores Inc

WMT

75.24
-3.67
-4.65%
Amazon.com Inc

AMZN

987.71
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The Kroger Co

KR

22.29
-2.27
-9.24%

Consolidation seemed like a natural progression, and once Amazon.com Inc. (NASDAQ: AMZN) and Whole Foods Market Inc. (NASDAQ: WFM) announced their deal on Friday, consolidation is most likely a necessary progression to deal with this monster. 24/7 Wall St. has taken a look at these earth-shattering events from the past week and given some analysis on how this might impact the rest of the industry.

First, Kroger Co. (NYSE: KR) — known as the largest pure play grocer in the United States — released its most recently quarterly results on Thursday. However its guidance tanked the stock and also brought down the industry as a whole.

In terms of guidance for the full year, Kroger lowered its EPS estimate to a range of $2.00 (C$2.64) to $2.05 (C$2.71) from the previous range of $2.21 to $2.25. Consensus estimates are $2.19 in EPS and $121.24 billion in revenue for the fiscal year.

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The ‘ Whole ’ Deal: What Amazon’s Whole Foods Market Acquisition Means for Retailers and Consumers. Wal - Mart is positioning itself as an everyday competitor to the Amazon machine. Wal - Mart acquired the online marketplace Jet.com in the second half of 2016.

Roger, it seems like the food industry is undergoing a dramatic change. Mr. Davidson has held senior-level executive roles at many of the nation’s largest supermarket chains, including Wal - Mart Stores, Inc., Wild Oats ( acquired by Whole Foods ), SUPERVALU, and Ahold USA.

Shares of Kroger closed Friday down 9% at $22.29, with a consensus analyst price target of $32.50 and a 52-week range of $20.46 to $37.97. Over the course of the week, the stock dropped 27.6%.

Second, Amazon is making an incredibly ambitious purchase by buying out Whole Foods. While this is shocking, it is no doubt Amazon’s brick-and-mortar challenge to the likes of Kroger and Wal-Mart Stores Inc. (NYSE: WMT).

Under the terms of the agreement, Amazon will acquire Whole Foods for $42 per share (a premium of 27% from the previous close) in an all-cash transaction valued at roughly $13.7 billion, including the net debt of Whole Foods. The transaction is still subject to shareholder approval, but the parties expect it to close in the second half of 2017.

Whole Foods will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world. John Mackey will remain as CEO of Whole Foods and its headquarters will stay in Austin, Texas.

Shares of Whole Foods closed Friday up 29% at $42.68. The stock has a 52-week range of $27.67 to $43.45 and a consensus price target of $33.95.

With Whole Foods, Amazon on collision course with Wal-Mart

  With Whole Foods, Amazon on collision course with Wal-Mart Some industry observers say Amazon will find it difficult to use Whole Foods to pull away Wal-Mart shoppers because the two stores appeal to different customers. But Michelle Grant, head of retailing at market research firm Euromonitor, said Amazon could use an obscure part of the Whole Foods portfolio - Whole Foods 365 - to lure Wal-Mart shoppers.Whole Foods 365 offers private-label goods and lower prices than typical Whole Foods stores, and is targeted at younger, value-conscious shoppers. Amazon could provide the financial capital and tactical ability to build that into something big.

In buying Whole Foods , Amazon hits Walmart squarely where it hurts: 56% of its U.S. sales come from food and grocery items. David Bell, a Wharton marketing professor, says the Whole Foods acquisition proves that “offline retail is absolutely not dead.

Whole Foods Market. Video. How the 'grocerant' is disrupting the 0 billion food industry . The results come as Amazon.com Inc. , with its Whole Foods Market acquisition , and Wal - Mart Stores Inc. with its Jet.com purchase, are making an e-commerce grocery push.

Amazon shares were up 2.4% at $987.71 on Friday, with a consensus price target of $1,110.84 and a 52-week range of $682.12 to $1,016.50. What stands out about this acquisition is that Amazon gained about $11 billion in market cap, which could nearly pay for the acquisition outright.

The Whole Foods acquisition is a huge disappointment for Sprouts Farmers Market Inc. (NASDAQ: SFM) on a couple of levels. According to Gordon Haskett analyst Chuck Grom:

First, given its Amazon Prime Now program (currently in ~10 stores with plans to add 10-15 more this year), we had always speculated that one day Sprouts might be on Amazon’s shopping list (not Whole Foods).  Second, given Amazon’s buying power (coupled with Kroger’s more aggressive price investments announced yesterday), the ramifications for Sprouts’ margin structure is certainly opaque at this juncture.  Conversely, on the other hand, let’s not forget that the Sprouts business model has been very transportable over the past 4-5 years (261 current stores; successful entry into the Southeast) and targets more of a middle-income shopper (e.g. greater market share opportunity long-term vis-à-vis Whole Foods).  Accordingly, we think today’s news 100% puts Sprouts into play with Wal-Mart and Kroger potential bidders.

Analysis | Drone-delivered kale, and 5 more things we might see at an Amazon-owned Whole Foods

  Analysis | Drone-delivered kale, and 5 more things we might see at an Amazon-owned Whole Foods Expanding AmazonFresh isn't the only thing that could come out of this deal. Expect the grocery shopping experience to be transformed.But expanding AmazonFresh isn’t the only thing that could come out of this deal. Amazon’s purchase could drastically change the way we shop for groceries.

Others might leave you scratching your head, like the theory that Amazon wants to be more like Wal - Mart Stores . Perhaps the Whole Foods acquisition is about home delivery? The rest of Whole Foods products, namely the bulk of its nonrefrigerated packaged goods, it obtains through a

Amazon's future is filled with convience as Amazon locker's will now be available at all Whole Food Market locations. Wal - Mart is using its website to fight back against Amazon's acquisition of Whole Foods . Target decide to lessen its advertisements within stores, in hopes it can cut prices.

Shares of Sprouts closed Friday down 6.3% at $21.01, with a consensus price target of $25.59 and a 52-week range of $17.38 to $25.98.

For Wal-Mart it might be too early to tell what this acquisition news might bring. On one hand, if Amazon continues down a path of consolidation of lower-to-middle income brick-and-mortar grocery chain/discount stores, the risk to Wal-Mart is much greater. However one counterbalance to consider is that a Whole Foods shopper is not a Wal-Mart shopper, in terms of demographic and location. One customer enjoys an annual household income of over $100K and the other pulls in around $40K to $50K. If Amazon decides to push the Whole Foods 365 Concept, then this might take a chunk out of the middle-income group that Wal-Mart enjoys.

Shares of Wal-Mart closed the week down 4.7% at $75.24, with a consensus price target of $80.49 and a 52-week range of $65.28 to $80.47.

Costco Wholesale Corp. (NASDAQ: COST) is seen in many consumers’ eyes as one of the best values out there, whereas Whole Foods has had trouble shaking its “Whole Paycheck” moniker. But this could change after the acquisition. The question is how Whole Foods’ value proposition changes relative to Costco once Amazon is in control. In other words, how much will Whole Foods lower prices?

Costco shares closed Friday down 7.2% at $167.11, with a consensus price target of $187.41 and a 52-week range of $142.11 to $183.18.

Amazon Robots Poised to Revamp How Whole Foods Runs Warehouses .
<p>The retailer could bring its distribution technology to the grocery chain</p>"We will be joining a company that’s visionary," Mackey said, according to a transcript of the meeting. "I think we’re gonna get a lot of those innovations in our stores. I think we’re gonna see a lot of technology. I think you’re gonna see Whole Foods Market evolve in leaps and bounds.

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