Whole Foods 2012 Annual Report Download - page 22

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Increased competition may adversely affect our revenues and profitability.
Our competitors include but are not limited to local, regional, national and international supermarkets, natural food stores,
warehouse membership clubs, online retailers, small specialty stores and restaurants. Their businesses compete with us for
products, customers and locations. In addition, some are expanding more aggressively in offering a range of natural and organic
foods. Some of these 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 operating results may be negatively impacted through a loss of sales, reduction in margin from competitive
price changes, and/or greater operating costs such as marketing.
Our growth depends on increasing sales in identical stores and on new store openings, and our failure to achieve these goals
could negatively impact our results of operations and financial condition.
Our continued growth depends on our ability to increase sales in our identical stores and open new stores. Our operating results
may be materially impacted by fluctuations in our identical store sales. Our identical store sales growth could be lower than our
historical average for many reasons including the impact of 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.
Our growth strategy includes opening new stores in existing and new areas and operating those stores successfully. Successful
implementation of this strategy is dependent on finding suitable locations, and we face competition from other retailers for such
sites. There can be no assurance that we will continue to grow through new store openings. We may not be able to open new
stores timely or operate them successfully. Also, we may not be able to successfully hire and train new team members or integrate
those team members into the programs and policies of the Company. We may not be able to adapt our distribution, management
information and other operating systems to adequately supply products to new stores at competitive prices so that we can operate
the stores in a successful and profitable manner.
Economic conditions that adversely impact consumer spending could materially impact our business.
Our operating results may be materially impacted by changes in overall economic conditions that impact consumer confidence
and spending, including discretionary spending. Future economic conditions affecting disposable consumer income such as
employment levels, business conditions, changes in housing market conditions, the availability of credit, interest rates, tax rates,
fuel and energy costs, the impact of natural disasters or acts of terrorism, and other matters could reduce consumer spending or
cause consumers to shift their spending to lower-priced competitors. In addition, there can be no assurance that various
governmental activities to stimulate the economy will restore consumer confidence or change spending habits.
We may experience fluctuations in our quarterly results of operations, which may adversely affect our stock price.
Our quarterly operating results and quarter-to-quarter comparisons could fluctuate for many reasons, including, but not limited
to, price changes in response to competitive factors, seasonality, holiday shifts, increases in store operating costs, including
commodity costs, possible supply shortages, general economic conditions, extreme weather-related disruptions, and other
business costs. In addition, our results may be impacted by the timing of new store openings, construction and pre-opening
expenses, the timing of acquisitions, store closures and relocations, and the range of operating results generated from newly
opened stores.
Our stock price has been volatile and may be negatively affected by reasons unrelated to our operating performance.
In fiscal year 2012, the closing market price per share of our common stock ranged from $62.44 to $100.08. 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, at times, experiences broad price fluctuations that may
adversely affect the market price of our common stock.
Adverse publicity may reduce our brand value and negatively impact our business.
We believe our Company has built an excellent reputation as a food retailer, socially responsible corporation and employer. We
believe our continued success depends on our ability to preserve, grow and leverage the value of our brand. Brand value is based
in large part on perceptions of subjective qualities, and even isolated incidents can erode trust and confidence, particularly if
they result in adverse publicity, governmental investigations or litigation, which can have an adverse impact on these perceptions
and lead to adverse affects on our business or team members.