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The Closing Bell: U.S. Stocks Sell Off; Nasdaq Leads Losses
Whole Foods getting absolutely obliterated AH. You have what feels like a significant portion of momentum names down substantially or in some cases massively (30-40-50%+) from the highs, but the market overall isn't down that bad. The Twitters of the world getting wrecked, but - to use something I own - a Conocophillips holding up quite nicely. I think it's probably not over for Twitter (Twitter founder Dorsey's co Square having also cancelled its IPO) and a number of other names.
Looking at the long term chart of TWTR, I wonder if there was any real long term enthusiasm for this stock? The lock out period kept investors tied to the stock but now that period is over and the price has done a round trip. I am one of those who hasn't fallen for these high flying social media stocks. I prefer something more solid.
Name Position % Symbol iShares Russell 2000 -7.11 IWM iShares 20+ Year Treasury Bond -5.75 TLT American Airlines Group Inc -4.65 AAL SPDR Barclays High Yield Bond -2.56 JNK iShares Nasdaq Biotechnology -1.62 IBB Netflix, Inc. -1.07 NFLX Texas Industries Inc -0.92 TXI Amazon.com Inc -0.84 AMZN Facebook Inc Class A -0.83 FB Chipotle Mexican Grill, Inc. Class A -0.76 CMG Cree, Inc. -0.74 CREE Lennox International, Inc. -0.71 LII Wynn Resorts Ltd -0.7 WYNN Toro Company -0.68 TTC Manhattan Associates, Inc. -0.66 MANH Dorman Products, Inc. -0.63 DORM Michael Kors Holdings Ltd -0.62 KORS Tyler Technologies, Inc. -0.6 TYL Walgreen Company -0.58 WAG Equinix, Inc. -0.56 EQIX Concur Technologies, Inc. -0.55 CNQR Restoration Hardware Holdings Inc -0.53 RH Pandora Media Inc -0.53 P TripAdvisor Inc -0.52 TRIP Salesforce.com, Inc. -0.49 CRM AvalonBay Communities Inc -0.48 AVB Harley-Davidson Inc -0.48 HOG Sonic Corporation -0.48 SONC Faro Technologies, Inc. -0.46 FARO Keurig Green Mountain Inc -0.46 GMCR Zillow Inc -0.45 Z Acuity Brands Inc -0.44 AYI Post Properties Inc -0.43 PPS Red Robin Gourmet Burgers, Inc. -0.42 RRGB Xylem Inc -0.42 XYL Mattress Firm Holding Corp -0.41 MFRM Boston Beer Company, Inc. Class A -0.4 SAM EastGroup Properties, Inc. -0.38 EGP Lululemon Athletica, Inc. -0.37 LULU Sprouts Farmers Market Inc -0.37 SFM Core Laboratories N.V. -0.37 CLB PetMed Express, Inc. -0.36 PETS Amedisys, Inc. -0.35 AMED Container Store Group Inc -0.35 TCS
In many areas, Sprouts Farmers Market has been taking away customers from Whole Foods as a cheaper alternative. They provide a WF like atmosphere without the high prices of WF and the grunginess of Walmart or Target even if the latter sell organic. Important for the people who typically go to WF.
But I am not sure Sprouts can survive given the small amount of traffic and almost no marketing at least in my area. It seemed like they started out strong, did an IPO and have been going downhill since then.
The problem with WF seems similar to Apple, they have saturated the premium market and have margin pressures from competition without anything new to offer. The quality of produce in my area has suffered for the prices they charge. Local weekend farmers markets have become the destination of choice for the affluent that previously went to WF for weekly produce.
I too have noticed large crowds at farmers markets in urban areas. It seems to be attracting shoppers who are looking for better prices and they get a good product in return.
In many areas, Sprouts Farmers Market has been taking away customers from Whole Foods as a cheaper alternative. They provide a WF like atmosphere without the high prices of WF and the grunginess of Walmart or Target even if the latter sell organic. Important for the people who typically go to WF.
But I am not sure Sprouts can survive given the small amount of traffic and almost no marketing at least in my area. It seemed like they started out strong, did an IPO and have been going downhill since then.
The problem with WF seems similar to Apple, they have saturated the premium market and have margin pressures from competition without anything new to offer. The quality of produce in my area has suffered for the prices they charge. Local weekend farmers markets have become the destination of choice for the affluent that previously went to WF for weekly produce.
It's funny you say that because I was also pondering the Apple comparison after skimming the WF conference call transcript. They talk about promoting "value" more, but I didn't get the sense they really wanted to/had an idea of how to go about it.
Whole Foods has their 365 brand, which is actually reasonable. Yet, they really don't promote it at all. Maybe I didn't see discussion of it in the transcript, but when asked about promoting value by an analyst, they went off on something about salmon. Yet, they have all of these 365 value items - tons of them throughout the store.
There is a farmers market nearby that is amazing - significantly better produce than I'm seeing at WF or other such stores, and it's much cheaper - but it's only 4 months out of the year. I was getting so much at the farmer's market last year that I hurt my back/shoulder a couple times.
I do think that there's an increasing amount of competition, both nationally and regionally. I actually like Fresh Market a great deal - I actually think their produce is better, although it is similarly priced. The rest of Fresh Market is more reasonable and I like the look and feel of the store. Additionally, FM often shifts its products, they seem to have new things all the time and there's often good clearances on quality products.
Costco is also having a little more in the way of organic products.
365 brand is designed to make WF a one stop destination for groceries and is low margin. The last recession seems to have changed consumer behavior in the upper middle and upwardly mobile class that frequent WF. It is becoming much more common for people to visit two or more places for their grocery and produce needs. Trader Joe's where available is benefitting. I see far less filled cart shoppers in WF than before the recession.
The other change seems to be the traffic decline in their highest margin item, prepared foods.
Interesting changes. Not sure how much of it is permanent and whether WF can continue with its current structure or has to reinvent itself over the next few years like Starbucks is struggling to do.
They definitely had a good thing going for a while.
WF prepared having a drop-off in traffic doesn't surprise me. How expensive WF is is one of the first things people mention, but prepared/salad bar is the one aspect of WF that I think has become expensive to the point of being a rip-off.
Trader Joe's is fine - I don't quite trust some of the prepared after it seemed like they had one recall after another, but I like a lot of what TJ's offers. Some of their new stores are definitely brighter, nicer and more open.
As much as I like Howard Schultz, it would not surprise me if they had a WF moment at some point. People haven't really responded well to their new bakery items (I think they're a major improvement, but what do I know..) They also have Teavana and Evolution Fresh as additional new brands/chains.
Comments
PRSCX can't seem to catch a break this year. Not sure many here would hold a fund like this after the dot com meltdown experience.
http://www.google.com/finance?cid=32086821185414
Good grief...
Flying high in April, shot down in May.
Interesting to see their shorts:
Name Position % Symbol
iShares Russell 2000 -7.11 IWM
iShares 20+ Year Treasury Bond -5.75 TLT
American Airlines Group Inc -4.65 AAL
SPDR Barclays High Yield Bond -2.56 JNK
iShares Nasdaq Biotechnology -1.62 IBB
Netflix, Inc. -1.07 NFLX
Texas Industries Inc -0.92 TXI
Amazon.com Inc -0.84 AMZN
Facebook Inc Class A -0.83 FB
Chipotle Mexican Grill, Inc. Class A -0.76 CMG
Cree, Inc. -0.74 CREE
Lennox International, Inc. -0.71 LII
Wynn Resorts Ltd -0.7 WYNN
Toro Company -0.68 TTC
Manhattan Associates, Inc. -0.66 MANH
Dorman Products, Inc. -0.63 DORM
Michael Kors Holdings Ltd -0.62 KORS
Tyler Technologies, Inc. -0.6 TYL
Walgreen Company -0.58 WAG
Equinix, Inc. -0.56 EQIX
Concur Technologies, Inc. -0.55 CNQR
Restoration Hardware Holdings Inc -0.53 RH
Pandora Media Inc -0.53 P
TripAdvisor Inc -0.52 TRIP
Salesforce.com, Inc. -0.49 CRM
AvalonBay Communities Inc -0.48 AVB
Harley-Davidson Inc -0.48 HOG
Sonic Corporation -0.48 SONC
Faro Technologies, Inc. -0.46 FARO
Keurig Green Mountain Inc -0.46 GMCR
Zillow Inc -0.45 Z
Acuity Brands Inc -0.44 AYI
Post Properties Inc -0.43 PPS
Red Robin Gourmet Burgers, Inc. -0.42 RRGB
Xylem Inc -0.42 XYL
Mattress Firm Holding Corp -0.41 MFRM
Boston Beer Company, Inc. Class A -0.4 SAM
EastGroup Properties, Inc. -0.38 EGP
Lululemon Athletica, Inc. -0.37 LULU
Sprouts Farmers Market Inc -0.37 SFM
Core Laboratories N.V. -0.37 CLB
PetMed Express, Inc. -0.36 PETS
Amedisys, Inc. -0.35 AMED
Container Store Group Inc -0.35 TCS
Ha! Up in down markets...and up markets. You've just got to believe!
But I am not sure Sprouts can survive given the small amount of traffic and almost no marketing at least in my area. It seemed like they started out strong, did an IPO and have been going downhill since then.
The problem with WF seems similar to Apple, they have saturated the premium market and have margin pressures from competition without anything new to offer. The quality of produce in my area has suffered for the prices they charge. Local weekend farmers markets have become the destination of choice for the affluent that previously went to WF for weekly produce.
I did not realize...did not pay as much attention to after hours numbers, but in this case...wow.
Whole Foods has their 365 brand, which is actually reasonable. Yet, they really don't promote it at all. Maybe I didn't see discussion of it in the transcript, but when asked about promoting value by an analyst, they went off on something about salmon. Yet, they have all of these 365 value items - tons of them throughout the store.
There is a farmers market nearby that is amazing - significantly better produce than I'm seeing at WF or other such stores, and it's much cheaper - but it's only 4 months out of the year. I was getting so much at the farmer's market last year that I hurt my back/shoulder a couple times.
I do think that there's an increasing amount of competition, both nationally and regionally. I actually like Fresh Market a great deal - I actually think their produce is better, although it is similarly priced. The rest of Fresh Market is more reasonable and I like the look and feel of the store. Additionally, FM often shifts its products, they seem to have new things all the time and there's often good clearances on quality products.
Costco is also having a little more in the way of organic products.
The other change seems to be the traffic decline in their highest margin item, prepared foods.
Interesting changes. Not sure how much of it is permanent and whether WF can continue with its current structure or has to reinvent itself over the next few years like Starbucks is struggling to do.
They definitely had a good thing going for a while.
Trader Joe's is fine - I don't quite trust some of the prepared after it seemed like they had one recall after another, but I like a lot of what TJ's offers. Some of their new stores are definitely brighter, nicer and more open.
As much as I like Howard Schultz, it would not surprise me if they had a WF moment at some point. People haven't really responded well to their new bakery items (I think they're a major improvement, but what do I know..) They also have Teavana and Evolution Fresh as additional new brands/chains.