Whole Foods 2014 Annual Report Download - page 16

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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, and
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 negatively impact these perceptions and
our business. We believe that many customers choose to shop our stores because of their interest in health, nutrition and food
safety and that they hold us to a higher food safety standard than other supermarkets. There is increasing governmental scrutiny
of and public awareness regarding food safety. The real or perceived sale of contaminated food products by us could result in
government enforcement action, private litigation, product recalls and other liabilities, the settlement or outcome of which might
have a material adverse effect on our operating results and brand value.
Changes in the availability of quality natural and organic products could impact our business.
We source our products from a variety of local, regional, national and international suppliers, and we rely on them to meet our
quality standards and supply products in a timely and efficient manner. There is, however, no assurance that quality natural and
organic products will be available to meet our needs. If other competitors significantly increase their natural and organic product
offerings, if new laws require the reformulation of certain products to meet tougher standards, or if natural disasters or other
catastrophic events occur, the supply of these products may be constrained.
A widespread health epidemic could materially impact our business.
The Company’s business could be severely impacted by a widespread regional, national or global health epidemic. Our stores
are a place where customers come together, interact and learn and at the same time discover the many joys of eating and sharing
food. A widespread health epidemic may cause customers to avoid public gathering places or otherwise change their shopping
behaviors. Additionally, a widespread health epidemic could also adversely impact our business by disrupting production and
delivery of products to our stores and by impacting our ability to appropriately staff our stores.
Our stock price may be volatile and adversely affected by general market factors, including fluctuations in our quarterly results
of operations.
In fiscal year 2014, the closing market price per share of our common stock ranged from $36.46 to $65.24. The market price of
our common stock could be subject to significant fluctuation in response to various market factors and events, including variations
in our sales and earnings results and any failure to meet market expectations. 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, we may be impacted
by 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; sales of substantial amounts of common stock in the public market or the perception that
such sales could occur; broad price fluctuations in the overall stock market and other factors.
Our investments in money market funds and certain other securities are subject to market risks, which may result in losses.
As of September 28, 2014, we had approximately $65 million in short-term investments classified as cash and cash equivalents
and approximately $673 million in available-for-sale marketable securities. We have invested these amounts primarily in state
and local municipal obligations, government agency securities, corporate commercial paper and bonds, and money market funds
meeting certain criteria. These investments are subject to general credit, liquidity, market and interest rate risks, which, if they
materialize, could have a negative impact on our results of operations.
Financial Reporting, Legal and Other Regulatory Risks
Pending or future legal proceedings could materially impact our results of operations.
From time to time, we are party to legal proceedings, including matters involving personnel and employment issues, personal
injury, product liability, protecting our intellectual property, acquisitions, and other proceedings arising in the ordinary course
of business. Our results could be materially impacted by the decisions and expenses related to pending or future proceedings.
Effective tax rate changes and results of examinations by taxing authorities could materially impact our results of operations.
Our future effective tax rates could be adversely affected by the earnings mix being lower than historical results in states or
countries where we have lower statutory rates and higher-than-historical results in states or countries where we have higher
statutory rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws or interpretations
thereof. In addition, we are subject to periodic audits and examinations by the Internal Revenue Service (“IRS”) and other state
and local taxing authorities. Our results could be materially impacted by the determinations and expenses related to proceedings