Whole Foods 2009 Annual Report Download - page 24

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foods. Some of these potential competitors may have been in business longer or may have greater financial or marketing
resources than we do and may be able to devote greater resources to sourcing, promoting and selling their products. As
competition in certain areas intensifies, our results of operations may be negatively impacted through a loss of sales,
reduction in margin from competitive price changes, and/or greater operating costs such as marketing.
We May Experience Significant Fluctuations in Our Identical Store Sales
Our results of operations may be materially impacted by fluctuations in our identical store sales. Our identical store sales
could fluctuate or be lower than our historical average for many reasons including new and acquired stores entering into the
identical store base, the opening of new stores that cannibalize store sales in existing areas, general economic conditions,
increased competition, price changes in response to competitive factors, possible supply shortages, and cycling against any
year of above-average sales results.
We May Experience Significant Fluctuations in Our Quarterly Operating Results
Our quarterly operating results could fluctuate for many reasons, including losses from new stores, variations in the mix of
product sales, price changes in response to competitive factors and a potential lack of customer acceptance, foreign currency
exchange rate fluctuations, increases in store operating costs, including commodity costs, that are either wholly or partially
beyond our control, possible supply shortages, general economic conditions, health care costs, legal costs, insurance costs,
extreme weather-related disruptions, including hurricanes and earthquakes, and potential uninsured casualty losses or other
losses. In addition, our quarterly operating results and quarter-to-quarter comparisons have been and may be impacted by the
timing of new store openings, construction and pre-opening expenses, the timing of acquisitions, store closures and
relocations, seasonality, and the range of operating results generated from newly opened stores. Quarter-to-quarter
comparisons of results of operations have been and may be materially impacted by the timing of new store openings.
Our Stock Price Is Volatile
From September 29, 2008 to September 27, 2009, the quoted market price per share of our common stock ranged from $7.04
to $30.13. The market price of our common stock could be subject to significant fluctuation in response to various market
factors and events. These market factors and events include variations in our sales and earnings results and any failure to
meet market expectations; changes in ratings and earnings estimates by securities analysts; publicity regarding us, our
competitors, or the natural products industry generally; new statutes or regulations or changes in the interpretation of existing
statutes or regulations affecting the natural products industry specifically; and sales of substantial amounts of common stock
in the public market or the perception that such sales could occur and other factors. In addition, the stock market in recent
years has experienced broad price and volume fluctuations that often have been unrelated to the operating performance of
particular companies. These market fluctuations also may adversely affect the market price of our common stock. Our cash
flow from the exercise of team member stock options may be adversely affected in the future by fluctuations in the market
price of our common stock.
We May Be Subject to Product Liability Claims and Reduced Brand Value if People Are Harmed By the Products We Sell
There is increasing governmental scrutiny of and public awareness regarding food safety. We believe that many customers
choose to shop our stores because of their interest in health, nutrition and food safety. We believe that our customers hold us
to a higher food safety standard than other supermarkets. Even isolated business incidents can erode consumer trust,
particularly if the incidents receive considerable publicity or result in litigation, which can significantly reduce brand value.
The real or perceived sale of contaminated food products by us could result in product liability claims, the settlement or
outcome of which might have a material adverse effect on our sales and operations.
Changes in the Availability of Quality Natural and Organic Products Could Impact Our Business
There is no assurance that quality natural and organic products will be available to meet our future needs. If other
supermarkets significantly increase their natural and organic product offerings or if new laws require the reformulation of
certain products to meet tougher standards, the supply of these products may be constrained. Any significant disruption in the
supply of quality natural and organic products could have a material impact on our overall sales and cost of goods sold.
Future Economic Factors Could Cause Impairment of Goodwill
Our total assets included goodwill totaling approximately $658.3 million at September 27, 2009. Goodwill is reviewed for
impairment annually at the beginning of the fourth fiscal quarter or more frequently if impairment indicators arise. We
allocate goodwill to one reporting unit for goodwill impairment testing. Our impairment reviews require extensive use of
accounting judgment and financial estimates. Application of alternative assumptions and definitions, such as reviewing
goodwill for impairment at a different organization level, could produce significantly different results. We may be required
to recognize impairments of goodwill based on future economic factors such as unfavorable changes in the Company’s stock
price and market capitalization, unfavorable changes in valuations of comparable companies, or unfavorable changes in
estimated future discounted cash flows of the Company’s reporting unit. Impairment of goodwill could result in material
charges that would adversely affect our results of operations and capitalization.