COLIN PAK, SAGE REISNER, ALEX

WOOD, BRIAN MEDRANO

Whole Foods

Mission

“Our Company mission is to promote the vitality and well-

being of all individuals by supplying the highest quality, most

wholesome foods available. Since the purity of our food and

the health of our bodies are directly related to the purity and

health of our environment, our core mission is devoted to the

promotion of organically grown foods, healthy eating, and

the sustainability of our entire ecosystem.”

Company Profile

•Opened September 20, 1980 in Austin, Texas

•Founder and Current CEO: John Mackey

•largest retailer of natural and organic foods in the United States.

•11th largest food retailer based on 2011 sales rankings from Progressive Grocer.

•335 stores in the US, Canada, and the UK, 78 stores in development now

Organic Food

•Organic Food will become more popular because:

• A heightened awareness of the role that healthy eating plays in

long-term wellness

• Better-educated and wealthier populace whose median age is

increasing each year

• Increasing consumer concern over the purity and safety of food (no

GMOs)

• Environmental concerns and marine life sustainability

Suppliers-Local Farms

Risks

• Premium prices on products

o dependent on a good economy (in past performed well)

• Expanding into foreign markets

o Less brand recognition in Canada and UK

• More competitors will offer organic products.

o threaten competitive advantage

Basic Metrics

Share Price 87.00

Shares Outstanding 185.33 M

Market Cap 16.20 B

52 Week Range 81.39 - 101.86

Dividend 0.20

PE / Forward PE 32.98 /25.71

PEG 1.55

EPS 2.65

EV/EBITDA 12.92

Market Segmentation

•One operating segment: natural and

organic foods supermarket

•Whole Foods tries to stay within their

niche to provide their customers with

the highest quality of products.

Identical Store Sales Growth

Geographic Sales Segmentation

2012 2011 2010

US 96.8% 96.9% 97.0%

Canada and UK

3.2% 3.1% 3.0%

Five Year Stock Price

Competitors

Publicly Traded Competitors include:

• Kroger

• The Fresh Market

• Natural Grocers

• Fairway

Some private competitors include Trader Joe’s and small organic

markets

Kroger

• Manufactures and processes some of the food for sale in its

supermarkets.

• Operates 2,435 supermarket and department stores such as

Kroger, City Market, Dillons, Jay C, Food 4 Less, Fred

Meyer, Fry’s, King Soopers, QFC, Ralphs and Smith’s.

• Largest distributer of groceries in the United States

The Fresh Market

•Specialty retailer focusing on perishable product categories,

•Non-perishable product categories consist of grocery and dairy

products, specialty foods, coffee and candy, and beer and wine.

•Operates 113 stores in 21 states, primarily in the Southeast, Midwest and

Mid-Atlantic United States.

Natural Grocers

• Operates natural and organic grocery and dietary supplement stores in the US

• Offers natural body care products.

• operates 60 stores in 13 states.

Fairway

Went public last week

Similar offerings to WFM –perishable goods, non perishable, specialty goods and wines/spirits

11 stores in the tri-state area (NY,NJ,CT)

Net income for 2012: -86.45M

Financial Comparison

WFM TFM NGVC

Stock Price 87.42 42.21 23.92

Shares Outstanding 185.33 M

407,202 22.4 M

Market Cap 16.20 B 1.99B 535.85 M

P/E 32.98 30.98 67.95

EV/EBITDA 12.92 13.34 22.53

Profit Margin 2.21% 4.83% 2.21%

Income Statement•Revenue:

• 2012: $11,698,830,000 (+16%)

• 2011: $10,107,790,000 (+11%)

• 2010: $9,005,790,000 (+12%)

• 2009: $8,031,620,000

•Revenue, Gross Profit, Operating Profit, and Net Income have increased over the

past four years.

•Diluted EPS has increased to 2.52 from 1.93 in 2011 (+31%)

•Dividends: .56 dividends/share

Balance Sheet

•Total Assets increased from 2011 to 2012 showing how the

company has been opening stores in more locations recently.

o 2011: $4,292.07 M

o 2012: $5,294.22 M

o 23.4% growth

•Increase in treasury stock in 2012 (-28.60M)

Statement of Cash Flows

Cash From Investing Activities decreased due to

investing in new stores

o 2011: ($450.72) M

o 2012: ($1,341.35)M

Increase in Investing activities by 197%

Equity Bond Analysis

Over last 3 year WFM met or beat quarterly EPS expectations

Q1 an Q2 of 2012 –beat Q1 by 8% and Q2 by 9%

Projecting that EPS will be higher than analysts’ expectations

Intrinsic Value: $93.18 with EPS growth of 21%

Past 3 years annual growth rate: avg EPS growth 35%

Equity Bond Analysis

Thesis

•Whole Foods Market is a buy based on the qualitative and quantitative

analysis.

•Continually opening new stores in the United States

•Same store sales growing since 2008

•Increasing awareness about organic food and environmental sustainability

•Performs well relative to competitors and is the largest distributor of organic

food is the US.

•Through the EB Analysis the company is/will continue to have high growth