Whole Foods 2007 Annual Report Download - page 24

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Our continued growth depends to a significant degree on our ability to open or acquire new stores in existing and new
markets and to operate these stores successfully. Our expansion strategy is dependent on finding suitable locations, and we
face intense competition from other retailers for such sites. There can be no assurance that we will continue to grow through
new store openings and/or acquisitions. We may not be able to timely open new stores 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.
We May Not Be Able to Successfully Integrate Acquired Businesses into Our Operations
We may not be able to successfully integrate acquired businesses into our operations and support systems, or the operations
of acquired businesses may be adversely affected by the introduction of our decentralized operational approach. Also, the
integration of acquired operations into our operations requires the dedication of management resources that may temporarily
detract attention from our day-to-day business.
New Stores May Negatively Impact Our Results
There can be no assurance that our new store openings will be successful or result in greater sales and profitability for the
Company. New stores build their sales volumes and refine their merchandise selection over time and, as a result, generally
have lower gross margins and higher operating expenses as a percentage of sales than our more mature stores. As we
accelerate our rate of new store openings, thus increasing the percentage of our sales from new stores and decreasing the
average age of our store base, there may be a negative impact on our results from a lower contribution of these new stores,
along with the impact of related pre-opening and relocation costs.
We May Experience Significant Fluctuations in Our Comparable Store Sales
Our comparable store sales could fluctuate or be lower than our historical average for many reasons including new and
acquired stores entering into the comparable store base, the opening of new stores that cannibalize store sales in existing
markets, increased competition, price changes in response to competitive factors, possible supply shortages, and cycling
against several years of above-average sales results. Our results of operations may be materially impacted by fluctuations in
our comparable store sales as the result of lower sales, lower gross profits and/or greater operating costs such as marketing.
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, foreign currency exchange rate fluctuations, increases in
store operating costs, possible supply shortages, extreme weather-related disruptions, including hurricanes and earthquakes,
and potential uninsured casualty losses or other losses. In addition, our quarterly operating results may fluctuate significantly
as the result of the timing of new store openings and pre-opening costs, the timing of acquisitions, store closures and
relocations and the range of operating results generated from newly opened. Quarter-to-quarter comparisons of results of
operations have been and may be materially impacted by the timing of new store openings.
Increased Competition May Have an Adverse Effect on Profitability
Our competitors include but are not limited to local, regional, national and international conventional and specialty
supermarkets, other natural food stores, warehouse membership clubs, small specialty stores and restaurants. These
businesses compete with us in one or more product categories. In addition, some are expanding more aggressively in
marketing a range of natural and organic foods, thereby competing directly with us for products, customers and locations.
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 markets 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.
Our Business May be Sensitive to Economic Conditions that Impact Consumer Spending
Our results of operations may be sensitive to changes in overall economic conditions that impact consumer spending,
including discretionary spending. Future economic conditions affecting disposable consumer income such as employment
levels, business conditions, 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. A
general reduction in the level of discretionary spending or shifts in consumer discretionary spending to our competitors could
adversely affect our growth and profitability.