Whole Foods ROE?

Question

Whole Foods' Return on Equity for 2007 was 11.63, but in 2002 it was 14.04.

What do you think this says about the company's potential?

Answer 1

The ROE, while an important fundamental statistic, isn't all that telling on its own in the case of Whole Foods.

There are several things working against Whole Foods at this time.

1.  Raw Input Food Costs are skyrocketing (corn, beef, chicken, wheat, cocoa, etc.)

2.  Increased competition in the organic foods market from Walmart and other regional stores.

3.  Souring economy.  People not willing to pay as much for premium products that are offered.

That being said, the company is planning to build a significant number of new stores, but many are in California which is facing a very poor economy especially with the housing slump.