Amazon-Whole Foods Is Not What the Market Expected

Amazon’s (NASDAQ:AMZN) $13.7 billion acquisition of Whole Foods last June sent shockwaves through the grocery industry like almost nothing before it. Stocks plummeted across the board. Kroger (NYSE:KR) lost 9.2%; Walmart (NYSE:WMT) fell 4.7%; Costco Wholesale (NASDAQ:COST) gave up 7.2%; and Sprouts Farmers Market (NASDAQ:SFM) dropped 6.3%.

The conventional wisdom at the time was that Amazon would slash prices and expand delivery, pressuring margins across the industry. However, several months after the e-commerce giant took over Whole Foods, the reality has been almost the opposite as those competitors have posted strong results. Walmart had its best quarterly comparable sales growth since 2010 in its third quarter. At Costco, comparable sales have surged 7% in the U.S. in the first 17 weeks of the fiscal year, excluding the impact of gas prices. Sprouts posted a 4.6% increase in same-store sales in its most recent quarter, and Kroger got back to positive growth after a brief dip. Read more

 

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