We are not retail analysts.
Although some would contend that our reputation precedes us in terms of expertise in selling “packaged products”…
Happily, you don’t have to be a retail analyst to know that the writing is on the wall for anyone who is operating in a space that Jeff Bezos fancies.
Last week, shares of Kroger, Sprouts, WalMart and Costco all fell on news that Amazon was set to slash prices at Whole Foods starting Monday.
Well, today is Monday.
And Monday is the day when Bezos relegated Whole Foods’ derogatory “Whole Paycheck” nickname to the dustbin of retail history in favor of the chain’s new nickname: “Organic Dollar General.”
Because as Bloomberg reports, Whole Foods is cutting prices on everything from fuji apples to organic rotisserie chicken this morning. Hilariously, Bezos has even managed to find a way to slash prices on organic avocados by something like 30% – and if you can discount organic avocados, then by God you can discount anything.
(Credit Suisse)
So although we are not retail analysts, we would very gently suggest that anyone who owns Kroger and/or Sprouts seriously consider whether that position is still tenable or at least whether the investment thesis makes any sense going forward.
I actually talked to a Kroger manager on Saturday and suffice to say he did not seem to appreciate the gravity of his company’s situation.
It’s also worth noting that Fresh Market bonds fell to an all-time low last week as the $800m of 9.75% notes due 2023 fell 3 cents to trade at 78.25 cents. Fresh Market was bought by Apollo Global Management last year.
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They are big enough to see predatory pricing litigation. I might not be an innocous experience either.