Source: Whole Foods Annual Report
In 2012 organic sales were 5% of the overall market with growth at 8% (blue line) in 2010 versus 1% for total food sales (black line see chart below). Buying organic is more expensive and as can be seen in the chart below sales were affected during the recent financial crisis. Given high healthcare costs in the US eating healthy food is seen as being preventative, pay a little extra now so don't pay more later. With low market share we believe growth in natural/organic should continue for a few years to come.
At WFM 40% of employees own some equity in the company and voluntary turnover is less than 10% unheard of in the retail industry. According to the annual report in 2012 more than 14,500 employees exercised 6.7 million options on average $13,600 each. Customers like to shop because they see familiar faces (less than 10% turnover), for its healthy food and they feel better about themselves. Last year WFM cash and product donations to charity exceeded their goal of 5% of after tax profits.
Get what you pay for
All in all WFM is one of a scarce breed of companies that encourages a healthier lifestyle while also giving back to the community. WFM has always traded at a premium to the market given its growth but just like healthy eating what seems expensive in the short term ends up being cheaper and better for you in the longer run.
Decisive is long WFM stock