Why did Fairway (FWM) even go public? This smaller 'neighborhood' healthy supermarket framed itself as a Whole Foods (WFM) look alike but what they didn't realize is that it is trying to open new stores too aggressively without getting the core traffic.
The weaker than expected third quarter results the company reported last night, along with a big management shake-up, showed big holes in the model. We have also seen issues at The Fresh Market (TFM).
The name to stick with remains Whole Foods. Their new stores are continuing to perform very well and exceed expectations. For the last eight quarters, the new store class has consisted of 28 stores open for approximately 6.5 months. And at 36,000 sq ft in size, they have produced average weekly sales of $515,000.
bottom line: Yes, competition is increasing. But stick with best of breed, Whole Foods-- which has the most attractive valuation, management and growth opportunities. It always is worth sticking with best of breed--whether its Home Depot (HD) vs Lowe's (LOW), Schlumberger (SLB) vs Weatherford (WFT) or Cummins (CMI) vs Navistar (NAV). Go with the best.