Whole Foods Market Inc. (WFM) continues to experience robust growth as the shift away from regular grocery stores continues. Whole Foods is obviously on the high end while the Super Stores such as Target and Wal Mart are continuously expanding their offerings to take business from the likes of Supervalu and Kroger. Obviously this is a huge market but the legacy supermarkets particularly Supervalu, are burdened with higher debt ratios than their competitors, which makes it difficult to compete on price as interest costs are quite significant. Whole Foods certainly has the ability to increase its store footprint but it must be careful not to jeopardize its financial condition through expanding too quickly. Management has been quite solid and I’d expect them to continue to make the right decisions but at the current valuation I don’t see it as a compelling buy.
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