With millions of Americans still sheltering in place and cooking their own meals, the grocery industry has been one of the few bright spots in an otherwise battered U.S. economy. Unless, that is, you are Whole Foods Market, the upscale chain acquired three years ago by Amazon.com.

Trips to Whole Foods in September were down 25% from a year earlier, according to Placer.ai, which tallies retail foot traffic from some 30 million mobile devices. Some of the decline is due to consumers consolidating shopping trips and buying more groceries online, but the traffic decline at Whole Foods is much steeper than at Walmart, Kroger and Trader Joe’s. Visits to Albertsons-owned stores, including Safeway, meanwhile, actually increased last month, compared with a year ago. And though Earnest Research estimates that Whole Foods sales (including online) rose by as much as 10% during the pandemic, some rivals are posting twice the gains.

“Everyone is buying more everywhere, but total customers are actually down for Whole Foods,” said Michael Maloof, who tracks consumer habits for Earnest Research. “Whole Foods is in a uniquely horrible place.”

Amazon doesn’t break out Whole Foods sales, so getting a complete picture of the chain’s travails is difficult. But few grocers were more awkwardly positioned for the pandemic, analysts say. The stores were rarely a one-stop destination before the outbreak even for fans. The company expanded its prepared meals sections for office workers seeking lunch or dinner on the go, but now those customers are homebound. And Whole Foods shoppers who have time to visit stores often confront long lines and aisles crowded with gig workers paid to fetch online orders.

Meanwhile, despite expectations that the world’s largest e-commerce company would use Whole Foods to re-invent food shopping, Amazon has opted to open a separate chain called Amazon

We believe there may be a good opportunity with Tyson Foods stock (NYSE: TSN) at the present time. TSN trades at $59 currently and is in fact down 34% so far this year. It traded at a pre-Covid high of $82 in February and is still 28% below that level now. TSN stock has gained only 4% from the low of $57 seen in March 2020, much less than the S&P 500 which is up 50% from its March bottom. TSN stock has underperformed the broader market as restaurants and retail chains remaining shut over the last couple of months, on account of the lockdown, meant very low demand for TSN’s products. Additionally, the recent spike in Covid-positive cases has limited the stock rise over recent months.  That said, with the lockdowns being lifted, supply constraints are likely to ease leading to higher volume sold. Also, the reopening of restaurants and retail chains is likely to boost revenue and margins in 2021. This could take the stock to over $80 – still below its pre-Covid peak – reflecting a potential upside of close to 40%. Our conclusion is based on our detailed comparative analysis on Tyson Foods stock performance during the current crisis with that during the 2008 recession in our interactive dashboard.

2020 Coronavirus Crisis

Timeline for 2020 Crisis So Far:

  • 12/12/2019: Coronavirus cases first reported in China
  • 1/31/2020:  WHO declares a global health emergency.
  • 2/19/2020:  Signs of effective containment in China and hopes of monetary easing by major central banks helps S&P 500 reach a record high
  • 3/23/2020:  S&P 500 drops 34% from the peak level seen on Feb 19, as COVID-19 cases accelerate outside China. Doesn’t help that oil prices crash in mid-March amid Saudi-led price war
  • Since 3/24/2020: S&P 500 recovers 50% from the lows seen

Amazon and Whole Foods have come a long way since merging in 2017, with the grocer emphasizing upping its game with technology.

“Some evolutions have occurred. We are a little more data-driven now than we used to be,” said CEO John Mackey during an interview with Maria Bartiromo on “Mornings with Maria” Wednesday. He added, “Amazon is helping alter our technology and upgrading it.”

Ticker Security Last Change Change %
AMZN AMAZON.COM INC. 3,177.00 +77.04 +2.49%


The $13.7 billion deal has allowed the grocer to tap Amazon’s Prime Members, which number over 100 million. He then hinted that the companies are working on even more technological advancements though he declined to detail what that will look like.

“I can’t talk about what we’re going to be opening up, I would be tipping off our competitors,” he said. “But I think we are going to be doing some exciting things.”

This as food retailing evolves “at a pretty rapid clip” he added noting it will be very different in five years’ time.


Amazon, founded by billionaire Jeff Bezos, has been a good partner for Mackey who compared the combination to a good marriage.

“Amazon has not messed with our higher purpose, our core values, our leadership principles,” he said. “They’ve let Whole Foods be Whole Foods.”

Whole Foods has 487 stores across the nation emplpoying 95,000 people.


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The results are in for FY20 for United Natural Foods (NYSE:UNFI), and the highlights are pretty amazing (from press release):

  • Reduced outstanding debt, net of cash, by $388 million; year-end adjusted EBITDA leverage ratio of 4.0x
  • Net sales increased to $26.5 billion
  • Adjusted EBITDA increased to $673 million
  • Adjusted EPS increased to $2.72

Despite beating earnings and revenue estimates, and raising FY21 guidance, the stock has sold off over 20%. Some are attributing this to the CEO’s retirement announcement, but given the nine-month timetable on that decision, the explanation leaves investors wanting more. No UNFI thesis on Seeking Alpha has referenced the management team as a company strength, and if anything, the mistakes and debt burden from the Supervalu acquisition are a reminder of the team’s missteps.

Possible other explanations:

  • Q4 cash generation fell short of investor expectations
  • Relatively significant number of shares (~2m) granted to management, diluting investors
  • Lack of CEO successor
  • Lack of Whole Foods contract extension
  • Margin pressure on FY21 revenue

While all of these could be part of the story, I still don’t see it. It is true that management expects Q3/Q4 21 to be tough comps Y/Y, but the fact it continues to guide above expectations for revenue and EBITDA after a blowout year shouldn’t be taken for granted. It has a good track record of setting reasonable guidance it can beat, which is even more encouraging.

Regarding the Whole Foods contract, the last extension was announced Nov 2nd, 2015. I expect a similar announcement in the coming couple quarters, removing a significant overhang from the stock.


Updating the valuation waterfall, I’ve included company guidance for FY21, assuming cash balance and market cap at current levels, and showing debt paydown of $310 which reflects EBITDA midpoint of $710m, less $225m for CapEx and

  • Amazon purchased Whole Foods Market for an estimated $13.7 billion in 2017.
  • Founder and CEO John Mackey wrote about the merger in his new book “Conscious Leadership.” 
  • Mackey said that Whole Foods was looking for a buyer after hedge fund JANA Partners acquired 8.8% of the grocery chain’s stock.
  • In the grocery chain CEO’s mind, Amazon and Whole Foods experienced the business world’s version of “love at first sight.”
  • “We moved from dating to engagement to marriage in just a few short months,” Mackey wrote.
  • Visit Business Insider’s homepage for more stories.


Locked in a battle for the soul of his grocery chain, Whole Foods Market founder and CEO John Mackey awoke one morning in 2017 with a single question on his mind: “What about Amazon?”

In his new book “Conscious Leadership,” Mackey described the “whirlwind courtship” that precipitated his company’s estimated $13.7 billion sale to Amazon. With many Whole Foods Market employees and customers complaining about the changes brought about by the chain’s e-commerce parent company, the grocery CEO’s account provides more insight into the decision-making that went into the 2017 acquisition that shook the retail world.

Mackey wrote about when he first heard of New York-based JANA Partners’ decision to buy 8.8% of the grocery chain’s stock on March 29, 2017. The hedge fund, however, wanted “launch a campaign against Whole Foods.”

According to Mackey, when he discovered that JANA Partners intended to convince Whole Foods to push out its board of directors and sell the business to the highest bidder as a means of “maximizing short term profits,” he felt as if “all the sunlight and bright possibility had been sucked out of my world.” Mackey had long been disturbed by the fact that his company’s “remarkable track record of growth wasn’t enough for Wall Street.”