Here’s Why Grocery Stocks Tumbled Again in August

Sonya Bells - Author

Sep. 11 2017, Published 11:37 a.m. ET

Grocers just had another bad month

Grocery stocks continued their challenging run in August as online juggernaut Amazon (AMZN) closed on its acquisition of organic and natural food retailer Whole Foods Market.

The deal erased billions of dollars from the market caps of major retailers when it was announced in June 2017.

Amazon was quick to announce price cuts for Whole Foods when the deal finally closed in August. That sent more tremors across the grocery sector. Supervalu (SVU), Sprouts Farmers Market (SFM), and Kroger (KR) closed August with monthly losses of 27.0%, 22.0%, and 10.0%, respectively.

The seven-company S&P 500 Food and Staples Retail Index, which includes Kroger (KR), fell close to 2.0% in August. The Consumer Staples Select Sector SPDR ETF (XLP) fell 1.0% during the month.

In the rest of this series, we’ll look at the stock performances of major grocery stocks in August 2017.

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Overview of the US food retail sector

The US food retail industry is comprised of store formats that range from small grocery shops and convenience stores to supermarkets, discount stores, and drug stores. The supermarket format is the largest component in this industry.

Walmart (WMT) is America’s largest food retailer followed by Kroger, the country’s largest supermarket. According to GlobalData Retail, Walmart and Kroger accounted for 14.5% and 7.0%, respectively, of the US food and grocery market in 2016.


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