Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

More Proof Politics and Business Don’t Mix: Whole Foods Market, Inc. (WFM) and More

Page 1 of 2

If you’re selling to one side of the political divide, don’t get too loud on behalf of the other, or Foolish investors may have to sell your stock.

With Americans divided politically as seldom before, it just makes business sense to keep your head down. It’s tempting to speak out loudly on the issues of the day, especially those impacting your bottom line. But do it carefully.

Whole Foods Market, Inc. (NASDAQ:WFM)

The best example of how not to do this is Whole Foods Market, Inc. (NASDAQ:WFM). The company caters to upscale, socially conscious consumers, who tend to vote Democratic. But its co-CEO and founder, John Mackey, loudly proclaims himself a libertarian and tends to support Republican causes.

Whole Foods Market, Inc. (NASDAQ:WFM)Not that there’s anything wrong with that, as Seinfeld said. And Mackey’s company was not badly hurt by his 2010 profile in The New Yorker, where he loudly proclaimed political ideas in direct variance to those of his customer base. Since that profile ran, in fact, WFM has doubled in value.

But as health reform has kicked in, Mackey has been taking it up a notch. He called it socialism, then fascism. He also claimed he would cut workers’ hours in response to the law, denying them the 30 hours work necessary to get coverage under the law.

For a guy who calls himself “daddy” to his workers, and his workers “team members,” this may have been too much for some shoppers. Shares tanked after earnings fell recently. The Motley Fool’s Blake Bos suggests that WFM is now a buy, but I question that.

Mackey himself has always been shocked at how few competitors have copied his act, which consists of charging premium prices for premium goods, and bragging about it. Well, privately held HEB finally has, and in his home market of Texas, under the name Central Market. Nine such stores are now open. Mackey’s shoppers are getting alternatives, and are starting, slowly, to vote with their feet.

Darden Restaurants, Inc. (NYSE:DRI)

Like many other companies in the service industries, Darden Restaurants, Inc. (NYSE:DRI) – owners of Red Lobster, Olive Garden, and other mid-scale restaurants – saw an opportunity to limit costs in the health care law.

The company, rather loudly, said it was experimenting with turning its 45,000 employees into part-timers, specifically to evade the law’s requirements. Worker groups have begun picketing the restaurants even though the company has publicly backed away from its plans.

But damage is being done. The company lowered guidance in December, and the stock promptly fell out of bed, falling almost 20% in a matter of weeks, despite the maintenance of a handsome 20 cent/share dividend.

It may well be that companies like Darden, which hire a lot of low-skill workers, will face higher costs due to health reform, the minimum wage, and other measures. Higher costs put pressure on margins, regardless of a store’s politics. But it’s one thing to lobby privately, another for a CEO to lobby publicly. And lobbying publicly against the interests of your workers can leave scars on investors, not just management.

Wal-Mart Stores, Inc. (NYSE:WMT) vs. Costco Wholesale Corporation (NASDAQ:COST)

Wal-Mart Stores, Inc. (NYSE:WMT), where founder Sam Walton started the drive to call workers “associates,” making many of those early workers into millionaires through purchase of company stock, is now ground zero in the American labor movement.

The company has been very loud in opposing organization of its workers, and on the surface has paid no price for it. Other than to make its stock a bargain.

Page 1 of 2

Biotech Insider Alert - $5 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...
X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!