Whole Foods Market Whole Foods Whole People Whole

Whole Foods Market “ Whole Foods, Whole People, Whole Planet ” Hiroko Takashima

U. S. sales of organic food and beverages is growing 2 • U. S. sales of organic food and beverages: $26. 7 billion in 2010 (cf. $6 billion in 2000) • Represented 7. 7% growth over 2009 sales • Approximately 4% of U. S. overall food and beverage sales in 2010 • Over 11% of all U. S. fruit and vegetable sales

Whole Foods Market : Products & Services • Founded in 1978 and is headquartered in Austin, Texas. • Operating natural and organic food supermarkets • Operated 316 stores (as of November 2, 2011) – the U. S. (303), Canada (7), and the U. K (6) • Annual sales: $10 billion in 2011 • Full Time Employees: 48, 200 [Shop sketch image] 3

Whole Foods Market : Features 4 1. Specialty for natural and organic foods – Good partnerships with vendors and suppliers – Make a plan to open 1, 000 stores in the U. S. in the future (CEO Walter Robb said) 2. Team Member Happiness – Ranked for 15 Years on FORTUNE's "100 Best Companies to Work For" List • Provides health care at no cost to full-time team members • All employees (except temporary) are eligible to receive stock options • High salary (ex: Associate Store Team Leader $80, 199/annual average) 3. Satisfied and Delighted Customers – Rely on word-of-mouth recommendations from the shoppers – Connect with the customers through social media websites

Features: Team Member Happiness • FORTUNE's "100 Best Companies to Work For" List 2012 http: //money. cnn. com/magazines/fortune/best-companies/2012/ 5

Features: Satisfied and Delighted Customers 1. Rely on word-of-mouth recommendations from the shoppers – Spend much less on advertising and marketing, About 0. 4% of the total sales in fiscal year 2010 2. Connect with the customers through social media websites, in addition to enewsletters, the corporate website and blog – Over 2. 1 million followers on Twitter – Over 780, 000 fans on Facebook – Many stores have set up their own Facebook and Twitter accounts http: //www. facebook. com/wholefoods 6

Competitive Comparison in Financial Statement • Whole Foods Market • Competitor: Kroger, Safeway [Strength] – Higher revenue growth rate – Much higher margin [Strength] – Big enterprise scale [Weakness] – Lower revenue growth and lower margin, even less than the industry average [Weakness] – Very high P/E ratio Whole Foods Market The Kroger Safeway Industry : Grocery Stores Market Cap: 13. 66 B 13. 87 B 7. 65 B 8. 53 B Employees: 48, 200 338, 000 180, 000 81. 00 K Qtrly Rev Growth (yoy): 12. 2% 10. 3% 7. 1% 11. 4% Revenue (ttm): 10. 11 B 88. 99 B 42. 84 B 10. 11 B Gross Margin (ttm): 35. 0% 21. 7% 28. 6% 25. 6% 844. 24 M 3. 94 B 2. 38 B 844. 24 M 5. 5% 2. 6% 2. 9% 342. 61 M 1. 18 B 529. 00 M N/A EPS (ttm): 1. 93 1. 94 1. 48 1. 6 P/E (ttm): 39. 44 12. 45 15. 07 18. 05 EBITDA (ttm): Operating Margin (ttm): Net Income (ttm): Source: Yahoo finance Direct Competitor Comparison (as of January 23, 2012) 7

Whole Foods Market: Stock Chart (for 2 years) • The stock price (WFM) is going up with some fluctuation. Raises FY 2011 Guidance; Raises FY 2011 Comparable Store Sales Guidance Raises FY 2011 EPS Guidance Source: Yahoo finance (as of January 23, 2012) 8

Stock Chart Compare to Major Supermarkets (for 2 years) • WFM stock price increased by over 150% (even though Costco increased by 50%) • Other competitors’ stock prices fluctuated or remained steady Whole Foods (WFM) Costco Kroger Wal-Mart Safeway Source: Yahoo finance (as of January 23, 2012) 9

10 Conclusion: • Q 1: Is Whole Foods Market undervalued or overvalued ? • My opinion : In the long-term view, “valued price” • Analyst opinion is below Price Target Summary Mean Target: $77. 82 Median Target: $80 High Target: $90 Low Target: $62 Source: Yahoo finance as of Jan. 25, 2012, Data provided by Thomson/First call

11 Conclusion: • Q 2. Now is it a good time to buy Whole Foods Market ? • My opinion: Yes! Why? 1. Organic foods sales growth ($26. 7 billion in 2010 <- $6 billion in 2000) 2. The company’s high growth performance and high margin (+1, 000 stores in the U. S plan) 3. Employees’ great commitment (15 Years on FORTUNE's "100 Best Companies to Work For" List) • Analysts opinion is below Recommendation Trends Current Month Last Month Two Months Ago Strong Buy 7 6 6 6 Buy 7 7 Hold 10 10 11 9 Under perform 0 0 0 1 Sell 0 0 Source: Yahoo finance as of Jan. 25, 2012, Data provided by Thomson/First call Three Months Ago