1. Investment Review Alma Ascencio

2.  Company background  Performance  Profit margins  P/E ratio  Earnings Per Share  Current ratio of assets and liabilities  Debt to Equity/solvency  Investment Opinion

3. Company Background  Whole Foods is a gourmet chain that offers superior quality natural and organic products at typically higher prices than traditional grocery products. The higher prices lead to higher profit margins which have helped to fuel the brand’s expansion during periods of economic growth.  Natural products are produced with as little processing as possible. Natural products may or may not be organic. Often natural products contain higher water content, and without traditional preservatives have a shorter shelf life which results in higher costs and inventory turnover.  Organic products must meet additional guidelines such as environmental sustainability, humane treatment of animals, handling processes that prevent contamination by non-natural chemicals, and similar processes that protect the integrity of the product. This increases costs as organic products must often be produced in different climates to avoid destruction by pests, crop yields may be lower due to increased susceptibility to disease, and animals require farmland to range freely versus being raised in cramped pens close to metropolitan areas.

4. Performance – Profitability

5. Performance – P/E ratio Whole Foods30.42x Kroger20.12x Sprouts44.73x GNC15.8x

6. Earnings Per Share 1.56 = Earnings per share are expected to rise to 1.9 by the end of fiscal year 2016.

7. Performance – Current Ratio Current Ratio = 1.40 Current Assets (1,756.00) / Current Liabilities (1,257.00)

8. Performance versus competition Forward PE of 26.5 is below the 5yr average of 30.1, but in-line with a downtrend across the market segment. Kroger leads the market segment as its greater diversity has allowed it to capitalize on increased consumer spending due to lower fuel prices, and additional expansions into online markets. WFM has limited capacity to capitalize on positive economic trends as the target audience is limited.

9. Additional Performance Indicators Trailing PE of 29.9 is slightly below the Food Retail & Distribution Industry average of 30.0 Forward PE of 26.5 is below the 5yr average of 30.1, but above the industry average of 24.7.

10. Detail Summary  Due to the nature of the niche market in which WFM competes, the company suffers more dramatically from negative consumer sentiment during economic downturns as consumers look to cut costs by favoring lower-grade products. Traditional grocers are less affected by these economic factors due to the price diversity of their product offerings.  While Whole Foods has successfully capitalized on the natural and organic foods market to date, future growth and earnings may be slower due to increased competition by traditional grocers. In May 2014, the grocer announced that it was facing much tougher competition from a variety of other, more diversified competitors.  Whole Foods has a far more limited market for expansion versus traditional grocers, typically expanding in areas that have a population in excess of 200,000 within a 20-minute radius.  Whole Foods expands in locations with a college-educated and young demographic under the assumptions that those with a college education generally have both higher disposable income and greater awareness of their health and food intake. Additionally, younger generations tend to prefer the instant gratification of ready to eat meals and are willing to pay a premium for them versus planning and preparing foods at home.

11. Investment Opinion  Whole Foods Market has capitalized on a unique approach to grocery consumption by creating a luxury goods niche in the grocery industry. While this has proven to be a successful business model, reasons exist to exercise caution in selecting Whole Foods Market as an investment option. It is my opinion that the increasing competition from traditional grocers, coupled with the limited expansion markets, will continue to degrade profits and add sufficient risk to justify avoiding Whole Foods Market as a long-term investment vehicle.  Potentially safer investments include more diversified grocers that have the structure and product flexibility to compete in various markets and economic conditions.