Instacart Thinks Its Deal with Whole Foods Will Survive Amazon Buyout

Xavier Trudeau
Juin 20, 2017

LOS ANGELES/MOUNT PLEASANT, S.C. The merger that shook food and retail stocks on Friday - Amazon.com Inc's proposed deal to buy Whole Foods Market Inc - rattled some employees of the upscale grocery chain who expressed fears ranging from layoffs to the loss of their laid-back corporate culture.

Whole Foods Market will continue to operate stores under the Whole Foods Market brand.

When the news broke that Amazon had agreed to buy Whole Foods for $13.7 billion, the retail food sector went a little bananas.

The more than 460 Whole Foods stores in the United States, Canada and the UK could also be turned into distribution hubs - not just for delivering groceries, but also as pick-up centres for online orders.

"I anticipate that Amazon should be able to lower the cost of Whole Foods and better enable them to compete in that market and start to bring some of those great organic products that people have liked without necessarily having to capture their whole pay check", he said.

Amazon said today it's buying the supermarket Whole Foods in a deal valued at almost $14 billion. The deal will grant Amazon with control over more than 400 stores, integrating the stores with technology. Firstly, don't forget that Whole Foods is a pretty trendy and high-end outlet with an organic focus.

On Friday, Wal-Mart said it would buy Bonobos, a popular internet apparel retailer; a year ago, it acquired Amazon competitor Jet.com and appointed that company's chief executive, Marc Lore, to strengthen its e-commerce operation.

The AP reported that Campbell Soup, Hormel, General Mills and Sysco shares fell between 3.2 and 3.3 percent, while United Natural Foods shares dropped 8.6 percent. The investment firm Jana Partners said in April that it had built up an ownership stake in Whole Foods because it saw ways to address its "chronic underperformance for shareholders". It has been stated that chief executive Jeff Bezos plans on keeping the extravagant brand image of Whole Foods, for providing premium fresh groceries, intact while slashing down the prices.

Whole Foods had fiscal 2016 sales of about $16 billion. Whole Foods' shares traded in the mid-$30 range for May and early June.

Barclay's analyst Karen Short today noted that another offer could be placed on the table for Whole Foods, prompting her to raise her stock price target for Whole Foods to $48 per share.

"These guys just want to sell us, because they think they can make forty or fifty per cent in a short period of time", Mackey told Texas Monthly's Tom Foster.

Apparently longtime CEO John Mackey will stay the CEO and the headquarters will stay in Austin. The Whole Foods purchase would let it expand to many more.

Only about 2% of about $600 billion in annual grocery sales are made online, according to Daphne Carmeli, CEO of Deliv, which handles same-day delivery for more than 4,000 retailers, including grocers.

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