NEW YORK (TheStreet) -- Whole Foods Market (WFM) stock is down 0.12% to $34.20 in after-hours trading on Monday after the company settled the New York City Department of Consumer Affairs' investigation into its labeling practices.
Earlier this year, the New York City group found systemic overcharging for pre-packaged foods at Whole Foods.
As part of the agreement, the Austin-based grocer will pay $500,000 and conduct quarterly in-store audits of at least 50 products from 10 different departments at all New York City stores to ensure the products are weighed and labeled accurately.
Additionally, Whole Foods will conduct training for all New York City employees who weigh and label products, the consumer affairs department said.
"After discovering the troubling and repeated mislabeling of pre-packaged goods at Whole Foods last year, we are happy to have reached an agreement with Whole Foods that will help to ensure New Yorkers are better protected from overcharging," DCA Commissioner Julie Menin said in a statement on Monday afternoon. "DCA will also continue its vigilance in making sure New Yorkers are protected every time they check out at the grocery."
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate WHOLE FOODS MARKET INC as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 5.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- WFM's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that WFM's debt-to-equity ratio is low, the quick ratio, which is currently 0.59, displays a potential problem in covering short-term cash needs.
- 37.64% is the gross profit margin for WHOLE FOODS MARKET INC which we consider to be strong. Regardless of WFM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.65% trails the industry average.
- Net operating cash flow has decreased to $132.00 million or 42.35% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food & Staples Retailing industry. The net income has significantly decreased by 55.5% when compared to the same quarter one year ago, falling from $128.00 million to $57.00 million.
- You can view the full analysis from the report here: WFM