High Price Food Retailers Suffer as Off-Price Retailers Gain



Trends in the food industry

A recent trend in the food industry is that high priced food retailers have been struggling to attract customers to their stores. For example, Whole Foods (WFM) in the recent quarter saw its same-store sales increase at a very slow pace, whereas Save-A-Lot stores, the food retail segment of Supervalu (SVU), and private-label food retailing giants like ALDI have been able to attract customers through their numerous offers and discounts.

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As the above chart shows, the recent periods have seen the comparable sales of Whole Foods Market (WFM) fall, whereas comparable sales of Save-A-Lot have picked up in recent years. This metric is a very important one for investors, as it gives them an idea about how the company’s future looks and whether the company can sustain the growth it is reporting. Thus, more than generating a high number once or twice, Wall Street awards stocks that have prospects of sustaining these numbers.

Stock performance and ETF exposure

Whole Foods Market (WFM) and Supervalu (SVU) make up 1.10% and 1.06% of the SPDR S&P Retail ETF (XRT), respectively. The other food retailers in XRT ETF are Kroger (KR) and Walmart (WMT). The YTD (year-to-date) returns of Whole Foods Market (WFM) and Supervalu (SVU) are -37.25% and -13.30%, respectively.


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