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Is Amazon’s Whole Foods Living up to Expectations?

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A $13.7-billion acquisition in food

Since Amazon.com (AMZN) is still in the early stages of digesting Whole Foods, it would likely be premature to declare whether or not the company’s expectations for the acquisition have been met. Amazon paid $13.7 billion to acquire Whole Foods in a move that was viewed as in sync with its expansion into the food business—a segment of retail that is still firmly held by legacy retailers like Wal-Mart Stores (WMT), Costco Wholesale (COST), Kroger (KR), and Sprouts Farmers Market (SFM).

Whole Foods, an organic grocer with operations in the US and overseas, was one of Amazon’s investments in 2017. It was actually Amazon’s biggest acquisition ever.

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Sales attributed to Whole Foods jumped nearly 250%

While Amazon is still early with its integration of Whole Foods, the company’s 4Q17 results showed that the business is just beginning to make its mark. In 4Q17, Amazon’s sales attributed to Whole Foods jumped more than 246% quarter-over-quarter to $4.5 billion. As a result, Whole Foods ended up contributing more to Amazon’s overall top line than the company was expecting when it put out its 4Q17 guidance.

Amazon was expecting its 4Q17 revenues to come in the range of $56 billion–$60.5 billion, and it ended up generating revenue of $60.5 billion, which was at the highest end of its outlook.

More possibilities

Amazon closed the acquisition of Whole Foods in August 2017, which made 4Q17 its first full quarter to see sales from the business reflected in its results.

In relation to Whole Foods business performance in the latest quarter, Amazon CFO (chief financial officer) Brian Olsavsky stated: “We’re very happy with the initial results out of the team in Whole Foods.”

In the next part of this series, we’ll discuss Amazon’s potential plans for Whole Foods in coming quarters.

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