The population of people willing to shell out $27.99 a pound for Humboldt Fog, a goat-milk cheese from California, is apparently beginning to decline. The reality that Whole Foods (WFM) has been forced to cut its outrageous food prices to keep up with competition, was evident in the second quarter earnings release. The stock was obliterated on Wednesday, dropping almost 19% to a two-year-low thanks to soft revenues in the quarter and lower guidance. Revenues came in at $3.32 billion, short of the $3.34 billion estimate. Additionally, the company earned 38 cents per share, short of the 41 cents per share estimate. Full year earnings are now expected to come in at $1.52-$1.56 per share, down from previous estimates of $1.61 per share. With a PE of 26, Whole Foods is still no bargain, unless a whole new generation of hipsters crops up, willing to pay $28 for cheese. Mark my words, full-year revenues for Whole Foods will fall short of $1.54/share.
Whole Foods Market (WFM) closed at $38.93 on May 7, 2014.