Editors' pick: Originally published Nov. 29.
There used to be a grocery store where customers stood in line to wait for the privilege of dropping a hundred bucks for the items in their shopping carts.
The store is still there. You've walked by it. You've shopped there. You know it as Whole Foods Market (WFM) . What's changed is your willingness to drop six dollars on a pound of organic kale there. (News flash: at my neighborhood food coop -- and, keep in mind, I live in New York City, where food snobbery is a badge of honor -- kale can be had for less than two bucks a pound.)
Whole Foods has been a crummy investment for the last 16 months. It's been stuck between about $29 and $35 a share ever since late summer of last yearn and hasn't tickled $40 since July 2015. And analysts are saying it's not likely to get back to that four handle - let alone the $63 price it commanded three years ago -- anytime soon. Shares rose a penny today to $30.94.
If you can get the wagyu beef on sale, don't hesitate. But the on-sale valuation of Whole Foods shares? That's no bargain, Wall Street says.
Not that management of the high-end food retailer hasn't tried to pretty itself up. In its most dramatic initiative the company has realigned the clunky management structure to put the company's visionary founder, John Mackey, in sole charge of the business. But Wall Street's takeaway is that the trends in place are the trends the retailer is going to have to continue to combat. Same store sales, for instance, fell 2.6% in the second quarter, steeper than the 2.1% decline Wall Street had anticipated. Customer traffic -- meaning the number of consumers coming through the doors - decline 4.2%, according to BMO Capital Markets. Analysts say any kind of a reversal in these trends is far enough down the road to keep savvy investors on the sidelines for several quarters.