Despite increasing revenues over the past three years Whole Foods Market (WFM) has experienced disappointing profits during the same interval. While WFM’s overall revenues increased by approximately 8% in 2015, and by 10% in 2014, its net income (profit) declined by about 7% in 2015 and increased by only 5% in 2014, indicating higher costs of operating their businesses. The size of the WFM balance sheet stayed relatively stable; however, the WFM common stock experienced very high volatility and posted a devastating loss to its value from a high of $65/share in October 2013 to about $30/share in December 2015. This performance was more distressing to investors as the S&P 500 index experienced gains during the same interval. The decision to open the lower-cost 365 supermarkets has been made against this financial background, in addition to other concerns relating to the long-term healthiness and growth of its core upscale supermarket business.
Please answer the questions below. Use either the Bloomberg terminals located at the School of Business or other reputable sources such as finance.yahoo.com, morningstar.com or Wall Street Journal etc. for the financial data you use in your answers. The screen prints of the financial data you use to support your answers should be submitted as an appendix attached to your term paper.
Questions:
Calculate the annualized stock price return of WFM over the last 3,5, and 10years.
How does it compare to the return of the competitors you selected in question 3 and the S&P 500 index over the same time periods?
What kind of steps can be taken regarding management strategy, operational efficiency and marketing policy to improve the disappointing performance of this company going forward?
Describe how the decisions made by management, marketing and operations functions of the company can impact, and hopefully improve, these financial ratios.