- Barclays (LON:BARC) issues its thoughts on how it see the Whole Foods evolution under Amazon (AMZN +0.1%) playing out.
- The firm expects broad price cuts across key categories, while some areas such as apparel are drastically paired down. Extra store space is seen going to Amazon innovation/help stations and online order pickup/Amazon Lockers.
- Beyond the brick-and-mortar plans from Seattle, pricing strategy is seen as crucial.
- "If AMZN were to reduce WFM’s merchandise margins to KR’s (~25%), WFM would generate an operating loss in the $1.2B range annually (excluding any offset from operating expense reductions from automation etc…)," calculates Barclays.
- "The demise of mediocre conventional retailers will meaningfully accelerate, in our view - as will the demise of other higher priced natural/organic/specialty retailers," writes the Barcap team. That last part isn't good news for Vitamin Shoppe (VSI -3.2%), GNC Holdings (GNC -2.5%) and Natural Grocers by Vitamin Cottage (NGVC -2.3%).
- Investors are betting with Barclays on the retail reset today. Sprouts Farmers Market (NASDAQ:SFM) is down 9.64% and is 19% lower over the last three trading sessions, while Apollo-backed Fresh Market bonds have plunged in value. Supervalu (SVU -3%) and Kroger (KR -0.9%) are also slipping again.
- The food sector is also pricing the impact of Amazon shouldering in to the industry. Post Holdings (POST -1.5%), Hershey (HSY -1.1%)., Kellogg (K -2%), Conagra Brands (CAG -1.8%), Treehouse Foods (THS -1.3%) and Mondelez International (MDLZ -1%) are peeling off value.
- Now read: Kroger: Down 8% As Amazon Announces Price Cuts At Whole Foods, But It Remains A Buy
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