That said, Whole Foods must also compete with grocery giants like Wal-Mart Stores, Inc. (NYSE:WMT), which recently upped the ante with its new fresh produce initiative. That initiative, in part, involves plans for purchasing produce directly from growers, with the guidance of new produce experts hired by the grocery behemoth. Incidentally, that’s somewhat similar to the way Whole Foods strives to buy produce directly from local organic farmers — albeit Wal-Mart Stores, Inc. (NYSE:WMT) must do so on a much larger scale with its more than 3,400 locations that sell produce.
In addition, Wal-Mart will be performing independent weekly checks on all of those locations, and is launching “Fresh Produce Schools” and expanded training programs to more effectively educate the 70,000 employees involved in handling the products.
As I suggested earlier this month, however, I still think Wal-Mart’s efforts in the near-term are more likely to harm more traditional large-scale grocers like Safeway Inc. (NYSE:SWY) and The Kroger Co. (NYSE:KR), which compete more closely with Wal-Mart’s economies of scale and preferred customer-base.
In the end, Whole Foods, so far, has done an admirable job in managing these risks while profitably growing its business. In doing so, Whole Foods stock has helped early investors return more than 30 times their money over the past 20 years.
That doesn’t mean, however, that there still aren’t gains to be had. After all, when we remember that Whole Foods’ management eventually hopes to gradually triple their number of stores in the U.S. to at least 1,000, I still think Whole Foods stock should continue to provide excellent returns for patient investors over the long haul.
The article 3 Risks Facing Whole Foods Stock originally appeared on Fool.com and is written by Steve Symington.
Fool contributor Steve Symington 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.
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