Also, let’s not forget that most grocers produce very, very thin margins. The Fresh Market Inc (NASDAQ:TFM)‘s a good example of another high-margin grocery business; in the year ended January 2012, its gross margin was 33%. Whole Foods’ margins have tended to be in the 35% to 36% range. On the other hand, compare those figures to grocery giant The Kroger Co. (NYSE:KR) , with recent annual profit margin in the low 20% range.
I imagine Whole Foods’ pricing maneuvers will help it weather a difficult 2013. Whole Foods has actually held up very well in past recessionary times, tinkering with pricing, so the current panic looks overdone to me.
I stand by Whole Foods’ position in the Prosocial Portfolio, as well as making it my recent choice as a Top Stock for 2013. Sellers may regret their moves out of this stock, and buyers will likely be pleased to hold this high-quality grocer for the long haul.
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The article Whole Foods: Panic in the Aisles Is Actually Appetizing originally appeared on Fool.com and is written by Alyce Lomax.
Alyce Lomax owns shares of Whole Foods Market. The Motley Fool recommends The Fresh Market and Whole Foods Market. The Motley Fool owns shares of Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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