Michel de Guilhermier's Blog

Whole Foods Délivre une Note d'Optimisme avec ses Résultats Trimestriels !

J'ai parlé à de très nombreuses reprises de Whole Foods Market Inc, notamment ICI lors d'un post détaillé sur ce leader américain et mondial de la distribution au détail de produits bio et naturels. J'en ai même fait une catégorie sur ce blog ! Pour ceux qui vont à Londres, il y a la-bas un flagship de 8000M2, en plein centre ville !

Créée en 1980, ce retailer parti initialement du Texas, possède aujourd'hui un peu moins de 300 magasins pour un CA annuel de l'ordre de 8 Milliards de $. Très belle histoire entreprenariale aussi, mais malheureusement pas de livre à dévorer sur le sujet !

J'attends leur arrivée en France, le co-fondateur Président, John MacKey, ayant déja annoncé qu'il voyait beaucoup de potentiel chez nous. Naturalia, chaîne rachetée par Monoprix il y a 2 ou 3 ans je crois, à quelques implantations d'avance mais aussi de nombreuses longueurs de retard en terme de savoir-faire. La visite d'un Whole Foods, véritable hypermarché du naturel et du bio, est en effet très impressionnante, on sent le concept extrêmement bien rodé à tous les niveaux.

Il y a quelques années, Whole Foods, positionné sur un segment premium, affichait des "comps" (croissance à magasins comparables) très impressionnants de l'ordre de 10%/an, et la société était la "darling" de Wall Street, avec comme corollaire un cours de Bourse totalement surévalué et des P/E absurdes. Comme Walmart à la fin des années 90, comme Amazon aujourd'hui, ces niveaux élevés ne pouvaient pas tenir, le cours de Bourse s'est écroulé, passant de 80$ au plus haut fin 2006 à 10$ seulement lors du creux de l'hiver 2009.

Plus important sur le fond que ces fluctuations boursières, le positionnement prix de la chaîne, contrairement à celui de Walmart, la rendait très vulnérable à la crise, et de fait les comps tournèrent au rouge dés la fin 2008 (ceux de Walmart sont toujours restés positifs, y compris dans le creux de 2009)

Aussi, le marché attendait avec beaucoup d'intérêt les résultats du Q4 2009 de Whole Foods, pouvant servir de baromètre général sur l'appétence des consommateurs américains à dépenser, en clair des messages de confirmation d'embellie au niveau de la consommation des ménages, 1er moteur de l'économie aux US.

Et bonne nouvelle, Whole Foods qui les annonçait hier, présente un beau redressement avec des comps de l'ordre de +3% !

Le co-fondateur et CEO John MacKey : "Our first quarter results exceeded our own expectations on both the top and bottom line. Given the strong sales momentum we are seeing, there are many reasons to be bullish about our future results".

Dans la foulée, il a relevé ses prévisions pour l'année 2010, ce qui est la aussi très positif.

Juste après les résultats de Whole Foods et grâce à eux, en after hours, les secteurs du retail et des consumers goods bénéficiaient d'un bon boost. Le site Marketwatch mettaient ces résultats en exergue d'ailleurs (ci-dessous). Le rally d'hier pourrait continuer aujourd'hui grâce à ces bonnes nouvelles.

Si vous voulez approfondir, ICI les transcripts de la conf call qui a suivi les earnings. Passionnant.

Même Walmart...!

Jusqu'à présent, Walmart, avec son positionnement everyday low price, l'incroyable efficacité de sa supply chain, s'en tirait relativement bien, et de toute façon très largement mieux que les autres retailers américains...

Pour s'en tirer mieux, c'est toujours vrai : en décembre 2008 Walmart a réalisé un honorable +1,7% à périmètre comparable, bien mieux que 95% des autres retailers (Target et Costco, par exemple et pour rester dans la même catégories, ont perdu 4%) , mais voila, les analystes et le management attendaient bien mieux, en l'occurence un +2,8% !

Conséquence, le géant de Bentonville, Arkansas, a revu de 10% environ à la baisse ses prévisions de bénéfices pour le Q4 2008. Et l'action dévisse aujourd'hui.

Ca y est, la récession américaine touche vraiment maintenant Walmart !

Re, même en décevant le marché avec leur +1,7%, ils s'en tirent très bien vs d'autres retailers, sur décembre : Gap -14%, Abercrombie & Fitch -24%, Sears -13%, Macy's -4%, JC Penney -8%, Saks -20%, Victoria's Secret -9%, etc. Suite à ces points opérationnels négatifs, le marché a reçu une avalanche de profit warnings de la part ds retailers. Après ma note du 26 décembre "how bad...very bad", il ne fallait pas s'attendre à autre chose pour ce début janvier !

Je sens que le 1er semestre 2009 va être très difficile pour le retail américain. Avec un peu de chance, voire beaucoup, ça pourrait être le creux de la vague.

Point intéressant pour le secteur, on a appris aujourd'hui que l'investisseur milliardaire Ron Burkle, qui a bâtit sa fortune avec des supermarchés, avait le contrôle de 7% de Whole Foods, le leader américain et mondial de la distribution de produits bio, qui depuis 2 ans connaît pas mal de problèmes (l'action a perdu près de 80% sur ses plus hauts). Ron Burkle connait bien le secteur puisqu'il possédait près de 20% de Wild Oats que Whole Foods a racheté l'année dernière.

Le positionnement haut de gamme de Whole Foods n'est pas vraiment facile dans le contexte actuel, l'investissement de Ron Burkle est pour le long terme...

Début janvier, on apprenait que Ron Burkle avait également durant la fin de l'année acheté environ 7% de Barnes & Nobles. On en déduira que l'homme, spécialiste du secteur, estime que c'est le moment d'acheter ce secteur, terriblement déprimé.

Je ne suis pas loin de le penser également.

Le Scandale Whole Foods & John Mackey : Quelle Honte !

Un honorable lecteur, anonyme cependant (si ce n''est pas son adresse IP qui atteste d'une présence aux US), m'a alerté avant hier du scandale actuel relatif à John Mackey, cofondateur et CEO de Whole Foods, scandale qui m'avait échappé durant mes vacances.

John, PDG fondateur il y a 25 ans d'une chaîne qui regroupe actuellement 200 magasins, leader mondial de sa catégorie, qui réalise environ 6Mds $ de CA, côtée à Wall Street (sur le Nasdaq), s'est amusé pendant de nombreux mois à poster anonymement sur un forum Yahoo.

Rien que ça ! Et quels posts ! Non seulement John Mackey parlait de la performance boursière de l'action, avec moultes détails, mais il s'est également permis de démolir publiquement son concurrent, Wild Oats, alors que pendant le même temps il en proposait officiellement l'acquisition !

Voila encore une bien mauvaise utilisation de l'Internet, des blogs et forums.

Un manque d'éthique incroyable doublé d'un manque de discernement pitoyable ! Bien que fondateur et visionnaire, je ne vois pas très bien ce que John Mackey a encore à faire à la tête de Whole Foods. Au Conseil d'Administration de trancher maintenant.

WFMI est toujours une très belle société, mais malheureusent l'image de son fondateur et PDG actuel est entâchée d'un sacré scandale qui ne peut que peser, du moins à court terme, sur la société elle-même, surtout que celle-ci s'est toujours proclamée la reine de l'éthique !

Son PDG doit incarner des valeurs fortes et nobles, et malheureusement John Mackey, aussi visionnaire soit-il, semble un peu défaillant sur cet aspect.

Quelle tristesse et quel dommage !

Cicéron (ou Esope, je ne me rappelle plus) disait que la langue est la meilleure et la pire des choses, et il en va de même pour Internet avec ses forums et ses blogs. Pour la petite histoire, alors que je dirigeais Photoways, je me rappelle avoir pris sur le fait un commentaire négatif sur notre blog officiel (www.photowaysien.com), commentaire qui avait été posté depuis les locaux d'un de nos concurrents, comme l'attestait formellement l'adresse IP.

Whole Foods and Ladurée in London !

Remember what I wrote some time ago, the following morning I left Photoways for good : the Ladurée macaroon is the symbol of Inspirational Stores !

Well, 2 days ago one of our new colleague came in the morning with a box of Ladurée's macaroons she offered to the bold team of Inspirational Stores. Hell, that was absolutely gorgeous. I ate new flavors I had never tried before such as mint and grenadine, and they were fantastic. Indulge yourself some Ladurée macaroons in the morning, and it will make your day !

Incidentally, I happen to know that the purveyors of the world's finest macaroons, is inaugurating today thursday its 2nd store in the UK following the Ladurée Café within Harrods on Knightsbridge. For all those rench expatriates, and others, store is located at Burlington Arcades near Picadilly Circus, a famous high-end shopping arcade.

To those who remember my times as manager of Burlington Consultants France, well the name was coming from this very Arcade which was just accross our office in London.

Anyway, while Ladurée is opening today thursday in Picadilly Circus, one of my invesment darling, Whole Foods Market (ok, pretty disapointing stock performance so far, but I'm in for the long term) yesterday wednesday opened its 80.000 Sq Ft flagship in South Kensington. It's now simply the largest grocery store in the UK ! This opening should mark the beginning of an aggressive attack of the UK market.

Interesting enough, while Whole Foods is entering the UK, Tesco, Britain super profitable n°1 retailer, is now spending $250M a year to open a chain of convenience stores selling organic food, "Fresh & Easy".

Shutterfly Honored Alongside Whole Foods !

Do you know the Copernican award ? It is awarded every year by Creative Good, a NY Customer Experience consultancy, and reckognizes top companies that succeed by putting customers at the center of their business universe.

For their 2007 prizes, the awards went to Whole Foods, in the "large company" segment, and to Shutterfly, in the medium company segment.

That's rather good news for me as well. Shutterfly is and has always been my model when building up Photoways, and Whole Foods, with its gorgeous merchandising and customer-centric organization also is a model in its kind.

I was yesterday dining with the guy who bought my fruit & vegetables retail chain in Lyon, he's now extremely successful but I told him he had to pay attention to the progress of Whole Foods. Their soon-to-open London flagship will mark their bold entry in Europe. Their know-how, in marketing great food is simply unbeatable on the planet. They sure have to fix the supply when in Europe and France, they have to adapt to the rigid retail regulation in France (both in terms of CDEC and labor laws), but they have quite an edge.

Back to the "Copernican Award", customers truly have to be put at the center of one's business universe, many companies claim they do that, but very very few really put it in practice. Doing so is not only a process, it is also a mindset and it is also an art.

This is all the fun and all the difficulty about it ! It's a bit like design, you may have some "rules" and process to follow, there's a great deal of intuition and vision about it.

Whole Foods' Proud Entry into the UK !

2 days ago I was telling my friend Jeremy (who continues to write excellent posts on his blog) that although WFMI stock hasn't performed that well since I purchased it 8 months ago, I hadn't the faintest doubt over the long term.

What I wrote 8 month ago about the company is still very valid, all I have to do is wait and to be patient...

Out of the 193 units the company now manages, there are only 3 in Canada and 6 in the UK. But those ones really have nothing to do with the regular Whole Foods US units. While US stores have 30.000 to 70.000 Sq Ft retail space, British units display a pale 4 to 6.000 Sq Ft retail space, 1/10th that of the US.

All told, it's really not the same concept, and they don't even use the same name. Whole Foods' presence in the UK, concentrated in London in fact, today is "Fresh & Wild".

But this is soon going to change : Whole Foods is to open its 1st super center in High Street Kensington in London, with over 80,000 Sq Ft retail space. Simply said, it  will be the largest Whole Foods unit on earth. In comparison, NYC Time Warner Center Whole Food is just below 60,000 Sq Ft...

The opening of the London unit , which is due in July, truly marks WFMI's foray into foreign land. Let's keep an eye on how well they do.

Walmart Scales Back Ambitions in Organic Food, Another Merchandising Mistake !

I'm a big fan of Whole Foods, both as a customer (when I'm in the US) and as an investor (though my investment in the stock, which dates back to last summer, hasn't ben particularily fruitful so far, but investing is over the long run).

I've posted many times on the company, you may find all posts on Whole Foods here and last august I thoroughly explained why I was a strong believer in WFMI, investment-wise I mean.

1 or 2 weeks ago, we learned that Walmart was scaling back its ambitions in organic food. Though I was rather happy to hear the news, it wasn't a big surprise as it was pefectly in line with my august post. Whole Foods does have a very strong competitive advantage and even Walmart, world's largest retailer, has difficulty in competing with this category specialist.

Merchandising is the art to have the right product in the right place, at the right time, at the right price and with the right atmosphere and display. Obviously, this depends on your customer basis. What works for retailer A doesn't automatically work for retailer B as the latter may lure a different customer profile.

Walmart learned it the hard way with fashion, more upmarket clothes : it simply didn't work.

And it's now the same story again with organic food. One year ago, they launched an agressive organic offensive, announcing with much fanfare they would double the number of items in stores (to about 400) and offering them at Walmart prices. Today, the strategy hasn't really paid off, along in fact with other high-end initiatives Walmart launched.

My take is the following, there's a triple issue here : its an image, a customer profile and an atmosphere mismatch.

- Walmart means "everyday low prices" before all, it doesn't stand for quality stuff at a premium.

- Its customers are very price conscious and price-sensitive, not exactly the same ones that have a propension to pay a premium for quality stuff. Sure Walmart has many higher-income customers, but price-sensitive ones !

- You don't easily sell premium stuff in a "cheap" environment.

Obviously, Walmart has lost its sense of "merchandising" with its recent high-end initiatives. I don't say that they will never succeed in the category, but you don't turn out to be a premium stuff seller overnight !

 

Apple 5th in World's Most Admired Companies !

Interesting article in Fortune about the world's most admired companies. 

2 of my "darlings" are well positioned, with Apple 5th and Berkshire Hathaway 6th in the overall ranking.

For the 2nd straight year Apple comes 1st as concerning Innovation (no wonder) with Google second. One of my other darling, Whole Foods, is 6th on the list for Innovation.

I'm so proud to have 5 Macs at my place (4 laptops as a matter of fact), and to often grab sushis at the Whole Foods in the Time Warner Center at Colombus Circle NYC (before taking the elevator up to the 35th floor to enjoy an expresso overlooking Central Park at the Mandarin !).

You know what, I find Apple and Whole Foods very inspirational...

Whole Foods Swallows Up Wild Oats !

Whole Foods, one of my favorite long term companies, today announced after market close they were to acquire rival Wild Oats for $565M, their largest single acquisition ever so far.

For WFMI, that's a quick way to eliminate competition and expand geographical presence, all the more that there is a good regional complementarity (regional critical mass is key in retailing for obvious logistics reasons). That's also $1.2bn revenues more on the top line of WFMI whose 2010 sales objective remains at $12bn vs the today $6bn.

However, though both companies are natural and organic food specialist retailers, their store format are rather different with the average Whole Foods units usually twice as big with almost twice more sales per square footage (specifically, $5.6bn for 190 units at WFMI and $1.2bn with 110 units at Wild Oats). As a consequence, Wild Oats is significantly less profitable then Whole Foods, and they were also not growing as fast.

Expanding is always long and painful for a physical retailer - finding the right place, negotiating the lease, building the store, etc - so that acquisitions usually make sense. Howewer, integration is no easy task, as with any acquisition in fact.

In physical retail, it's long and costly to set up new stores, but when they open trafic then flows immediately (if location is right). In the e-commerce business, it's so easy to open a store, but it's then so tough to make trafic flow in. Worse, when someone drives to your store, it could be a pain to get out without buying anything as it means having to spend time going to another one, while a competitor is always just one click and one second away in the cyberspace ! Though trafic and conversion rates analysis (on a daily basis) are the basics of the retail business, physical or e-commerce, the nitty-gritty and the logic are altogether different.

Anyway, Wall Street seems to like the move as it pushed WFMI 4% higher in after hours trading despite the dissapointing earnings report (Whole Foods missed analysts' expectations).

Note that a Los Angeles based Private Equity firm was a key shareholder of Wild Oats.

Mission Statement on Plastic Handbags !

Contrary to what we have in France, most successful American retail chains have a clear mission statement which is visibly displayed inside stores. I think it's a very good thing, for customers and employees alike, and I applied that method when managing my fruit & veg retail chain in the Lyon area.

Not only Whole Foods displays its mission statement on the walls of its stores, but also I particularly like what's written on their plastic handbags every consumers go away with :

Our Core Values

We sell the highest quality foods available
We satisfy and delight our customers
We care about Team Member happiness and excellence
We create wealth throgh profit and growth
We care about our community and our environment

About the quality of their food, for the first time I tested their sushis, and they are truly fresh and delicious. As usual, the whole store is a fantastic shopping experience : enormous choice, enticing products, great store design, perfect lighting, perfect cleaness, nice smells, professional and helpful employees, etc...

As soon as I took the picture a store employee rushed at me telling me "no photograph in the store" !