How the World Spends Its Money Ever wondered how global consumers spend their hard-earned incomes? Data from the World Bank's most recent study breaks global individual consumption into 11 buckets--from food and clothing to health care and recreation. While just 6% of U.S. income goes to food China residents spend 24% and Ethopians a whooping 55%. At the other extreme, Americans spend 18% of its income on healthcare, which is much higher than most other countries. How The World Spends Its Money - Forbes.com
When you're hot you're hot, and when you're Whole Foods Market (NASDAQ: WFMI) you're ice cold -- and you're a health food store recalling beef provided by a supplier with a long history of USDA run-ins and a role in the latest outbreak of E. coli.
The Washington Post reports that "The meat Whole Foods recalled came from Coleman Natural Foods, which unbeknownst to Whole Foods had processed it at Nebraska Beef, an Omaha meatpacker with a history of food-safety and other violations. Nebraska Beef last month recalled more than 5 million pounds of beef produced in May and June after its meat was blamed for another E. coli outbreak in seven states."
Nebraska Beef's history of run-ins with the FDA is pretty remarkable: sanctions for problems including feces-contaminated carcasses, water from pipes dripping onto meat, and E. coli issues as far back as 1997.
That Whole Foods was unaware that it was acquiring its merchandise from such a questionable source raises serious questions about its quality control and sourcing -- those are two of the main reasons that many consumers are willing to pay a premium for Whole Foods products.
This is probably an isolated incident but, from a PR perspective, it's likely to be very damaging. With its reputation for being expensive (see Sarah Gilbert's Whole Paycheck) hurting sales in the current climate, Whole Foods is ill-equipped to deal with a scandal like this.
This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Whole Paycheck below in the comments.
Having long shopped at overpriced gourmet foods markets, I'll admit to having rolled my eyes a bit -- maybe even scoffed -- when I first heard the beloved nickname for Whole Foods (NASDAQ: WFMI), "Whole Paycheck." Of course, this was also when I was single and living on a dot-com boom-style income.
Today, I rarely shop at Whole Foods; there isn't one in my neighborhood, and it's true: it's not difficult to spend upwards of $100 on ingredients for one meal. While there are choices on the lower end of the price spectrum, especially in the company's 365 house brand line and seasonal produce, the grocery chain has long prided itself on providing a wide range of organic and gourmet ingredients; and if its customers demand star fruit from Brazil, stinky cheeses from around the globe, and sushi-quality tuna, by all means, Whole Foods will provide it, and won't bat an eye about charging for its hard work.
Despite the fact that the markets were lower much of the day, they eventually managed to on the session higher. This was a win considering that profit takers and short sellers weren't able to hammer down the market after such large gains Tuesday. Oil fell again to levels under $119.00.
EMC Corp. (NYSE: EMC) shares were down under 1% right before the close today, although they had been down 5% after some rumors that Cisco was interested in the company were put to sleep.
Kraft Foods Inc. (NYSE: KFT) is continuing to see options speculation build in the stock. Shares were mostly flat today, but options volume was huge again and is up 10% in seven trading sessions.
10 Tech Giants to Buy Now Shares of companies such as IBM, Nokia and Microsoft have taken a hit along with the rest of the market, but they don't deserve to be this cheap. Other tech stocks to consider include Apple, Cisco, Google, HP, Intel, Oracle and Qualcomm. Ten Tech Giants to Buy Now - Kiplinger.com
New Life for Grocery Store Standbys Innovation is Pinnacle's lifeblood. The N.J.-based company -- which so far owns or licenses more than a dozen food brands -- specializes in acquiring venerable, but stagnant, brand names in need of TLC. It then works to breathe new life into them with updated formulations, new products, improved packaging, added convenience and smart marketing. Among the brands in Pinnacle's cub bard are Duncan Hines, Lender's Bagels, Log Cabin, Hungry Man, Mrs. Butterworth, Aunt Jemima, Swanson and more. Pinnacle gives new life to old standbys - USATODAY.com
Whole Foods (NASDAQ: WFMI) was one of the great retail growth stories of the last five years. From mid-2003 to early 2006, the company's shares rose $25 to $77. After a couple of tough years, the stock is back under $20.
Whole Food's most recent quarterly results were abysmal, adding to the perception that the best days for the health food chain are over.
WFMI's net income dropped to $39 million from $49 million in the same quarter a year ago. The company also suspended its dividend and cut capital spending for non-store activities by $50 million.
According to the AP, "The natural foods grocer said it now expects sales growth of 6 percent to 10 percent for the year - rather than the previously stated 25 percent to 30 percent growth. And the company said its comparable-store sales are expected to grow 1 percent to 5 percent, down from the previously anticipated 7.5 percent to 9.5 percent growth."
Not unlike Starbucks (NASDAQ: SBUX), Whole Foods is caught in a downturn it cannot arrest. Larger food chains looked at the WFMI success and decided to open natural food sections of their own. Whole Foods charges a premium for its products and, in a slow economy, consumers are less likely to accept that.
The recession will end, but competition from larger food retailers will not. Whole Foods may have to drop its prices permanently. That means its old margins are never coming back.
Douglas A. McIntyre is an editor at 247wallst.com.
U.S. stock futures were mixed Wednesday morning after Tuesday's big rally. Bigger-than-expected losses at mortgage lender Freddie Mac, which caused it to cut dividends, as well as lower profit at Time Warner dampened mood on Wall Street. Meanwhile, oil held above $119 ahead of inventory report later today, but crude futures were slightly higher.
Freddie Mac (NYSE: FRE), the second-largest U.S. mortgage-finance company, posted a larger fourth-quarter loss of $821 million, or $1.63 a share, than analysts estimated as delinquencies rose and cut its dividend to shore up capital. The common-share dividend will be reduced to 5 cents from 25 cents. Bloomberg writes that CEO Syron is "seeking to bolster capital and restore confidence after U.S. Treasury Secretary Henry Paulson was forced to step in with a rescue plan for Freddie and the larger Fannie Mae." So, first, I doubt investors have much confidence in Syron after reports surfaced he ignored warnings. Second, is Wall Street really surprised the mortgage buyer disappointed? That its credit-related expenses doubled from the previous quarter? Haven't we been there before? FRE shares are down 8.7% in premarket trading at last check.
Meanwhile, Time Warner Inc. (NYSE: TWX) also reported this morning, saying second-quarter earnings fell 26% to $792 million, or 22 cents per share (24 cents on adjusted basis), on declining subscriber fees at its AOL online unit and lower ad revenue at the Time publishing business. Revenue was 5% higher at $11.6 billion. Thomson Financial says analysts expected profit of 23 cents per share on revenue of $11.46 billion. TWX affirmed its full-year financial targets after revenue rose at its film, cable and networks segments.
Sprint Nextel (NYSE: S) posted a second-quarter loss of $344 million, or 12 cents a share, as revenue fell to $9.06 billion. But the No. 3 U.S. mobile service lost fewer subscribers than expected. The results beat earnings estimates but missed on revenue. Sprint shares are trading over 6% lower in premarket action.
"Shawn Hebb may have one of America's toughest jobs: convincing people that Whole Foods Market Inc. (NASDAQ: WFMI) can be an economical place to shop," according to The New York Times. I would beg to disagree. His job is the toughest, even harder than John McCain's campaign manager or Michael Vick's PR consultant.
Hebb is the guy who gives tours of America's most uptight grocery chain to convince shoppers that they do not necessarily need to spend $10 for an apple. How bad are things at Whole Foods that the company needs to teach people how to shop?
Whole Foods, down 48% this year, also may be a victim of its own success. Even my humble neighborhood grocery store offers a pretty good selection of organic goods such as Earth's Best baby food and Kashi cereal. I even bought some wild Alaskan salmon on sale a few weeks ago. Why on earth would I need to make a special trip to Whole Foods or any other upscale grocery chain given high gas prices.
Even more troubling, according to The Times, is that interest in organic food is leveling off. This leaves Whole Foods in a real organic pickle. "...a big question for Whole Foods is whether even its core customers will continue to pay prices like $6.99 a pound for all-natural, air-chilled chicken breast or $12 for a bag of cherries," the Times says.
Many customers are probably saying goodbye to Whole Foods and hello to Wal-Mart Stores Inc. (NYSE: WMT).
If a new legal ruling forces Whole Foods to reverse its Wild Oats buy-out, WFMI shares could soar.
A federal appeals court has decided that the FTC's challenge of the merger between Whole Foods (NASDAQ: WFMI) and Wild Oats should have gone forward. A lower court has said the FTC had to cease its investigation into whether the marriage was anti-competitive.
According toThe Wall Street Journal, "Jeffrey Schmidt, head of the FTC's competition bureau, said the agency is hopeful the ruling will ultimately allow the FTC to undertake a full review of competitive issues raised by the combined companies."
Whole Foods ended up with 74 Wild Oats stores, which it plans to cut down to 50. The FTC could ask the new company to close other locations in areas where the new parent has two stores, and, perhaps a monopoly for that region.
The FTC could also argue that the entire merger constitutes an antitrust threat. That news could not be better for WFMI shareholders. If Wild Oat has to be spun back out, it would need to re-brand its stores, add expensive management, and undertake its own marketing. In other words, it would be a severely weakened competitor for Whole Foods, instead of a thorn in the side of WFMI shareholders.
Shares in WFMI are off well over 40% this year. Stocks in many other major food retailers are closer to flat. Part of this may be due to the concern that premium products do poorly in a recession. But it may also have to do with the fact that Wild Oats stores were considered weaker as a group than the original Whole Foods chain.
If WFMI gets to rid itself of the company it got in the buy-out, its shares might get back from $22, near their 52-week low, to the $30 to $40 range.
Today was light on the economic front as far as impact numbers. The June leading economic indicators were down at -0.1%, and the May gain of +0.1% was revised lower to -0.2%. This shows little argument for a strengthening economy. Oil showed how it can still rise as tropical storm Dolly is in the Gulf of Mexico and no deal was reached with Iran, with prices back above $131.00 per barrel. Today was looking like a gain at the start, but the market slid as the day went on.
Below are today's unofficial closing bell index levels:
DJIA 11.467.67 (-28.90) S&P 500 1259.72 (-0.96) NASDAQ 2279.69 (-3.09) 10 YR T-NOTE 4.067% (-0.014%) 52-WEEK LOWS Top Analyst Calls
Bank of America Corp. (NYSE: BAC) showed a more than 4.6% gain at $28.80 in today's final minutes after the earnings report this morning came in far above lowered expectations. This stock is now up over 50% in a few days.
Whole Foods Market (NASDAQ: WFMI) shares are trading higher today after an analyst at Morgan Stanley upgraded the stock to Equal-weight from Underweight, as noted by Eric Buscemi. If you agree with Morgan Stanley and think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on WFMI.
After hitting a one-year high of $53.65 in October, the stock hit a one-year low of $20.18 last week. WFMI opened this morning at $23.27. So far today the stock has hit a low of $22.37 and a high of $24.06. As of 12:45, WFMI is trading at $22.50, up $1.12 (5.2%). The chart for WFMI looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $19 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 15.6% return in just four weeks as long as WFMI is above $19 at August expiration. Whole Foods would have to fall by more than 15% before we would start to lose money.
WFMI hasn't been below $20 at all in the past year and has shown support around $21 recently. This trade could be risky if the company's earnings (due out on 8/5) disappoint, but even if that happens, this position could be protected by the support the stock might find at its year low between $20 and $21.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in WFMI.
MOST NOTEWORTHY: Teva Pharmaceutical, Blue Coat Systems and American International Group were today's noteworthy upgrades:
Deutsche Bank upgraded shares of Teva Pharmaceutical (NASDAQ: TEVA) to Buy from Hold to reflect the company's greater growth prospects following the acquisition of Barr (NYSE: BRL). The firm raised the target to $56 from $47.
ThinkPanmure upgraded Blue Coat Systems (NASDAQ: BCSI) to Buy from Source of Funds based on the company's growth prospects following positive channel checks.
American International Group (NYSE: AIG) was raised to Buy from Neutral at Banc of America on valuation, as they find the risk/reward attractive at current levels.
OTHER UPGRADES:
Goldman upgraded the Semiconductor Production Equipment sector to Neutral from Cautious and added Verigy (NASDAQ: VRGY) to its Conviction Buy List.
Morgan Stanley upgraded Whole Foods (NASDAQ: WFMI) and Cintas (NASDAQ: CTAS) to Equal Weight from Underweight.
MOST NOTEWORTHY: Texas Industries, TransGlobe Energy and Level 3 Communications were today's noteworthy downgrades:
Stephens downgraded shares of Texas Industries (NYSE: TXI) to Equal Weight from Overweight as it believes higher energy costs will affect the company's ability to achieve its guidance. The firm lowered its target to $68 from $83.
Jefferies assumed coverage and downgraded shares of TransGlobe Energy (NYSE:TGA) to Hold from Buy as it sees limited upside until the company completes its seismic activity and can better quantify its exploratory reserve potential. The firm lowered its target to $5.25 from $6.50.
Citigroup downgraded Level 3 (NASDAQ: LVLT) to Sell from Hold as it believes the pullback in telecom valuations increases downside risk for the stock. Citigroup lowered their target price to $2.50 from $3.
Alcatel-Lucent (NYSE:ALU) was raised to "neutral" from "underperform" at Merrill Lynch, according to24/7 Wall St. The financial website also reports that Whole Foods Market (NASDAQ:WFMI) was cut to "neutral" from "buy" at UBS.
Citigroup added Google (NASDAQ:GOOG) to its Top Picks Live list, according toBriefing.com. The news service reports that Time Warner (NYSE:TWX) was also added to the list.
Societe Generale raised its rating on BP (NYSE:BP) to "hold" from "sell" according toMarketWatch.
When you're hot you're hot, and when you're 
This post is one in a series on prominent company nicknames. 
Here are some highlights from this past week's 
Despite the fact that the markets were lower much of the day, they eventually managed to on the session higher. This was a win considering that profit takers and short sellers weren't able to hammer down the market after such large gains Tuesday. Oil fell again to levels under $119.00. 
U.S. stock futures were mixed Wednesday morning after Tuesday's big rally. Bigger-than-expected losses at mortgage lender Freddie Mac, which caused it to cut dividends, as well as lower profit at Time Warner dampened mood on Wall Street. Meanwhile, oil held above $119 ahead of inventory report later today, but crude futures were slightly higher.
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