Christine:
I have followed this company for a while now. I used to live
in Austin, Texas where WFMI started out with their very first
store and subsequently a second store in North Austin. I used
to shop in both loactions and was impressed with the service
and loyal customer base. Also, they have some progressive
executive compensation scheme where the guy at the top does
not get paid more than x times more than the lowest paid worker.
The number x is fairly low for an American Corp. I remember
reading about this in their annual report last year when I
thought it was expensive at $13-15 range. I have stopped
following it in '96 since it has moved out so far so quickly.
I moved up to the Boston area about 5 yrs ago and started
shopping at Bread & Circus about 2 yrs ago. Great place
catering to the upscale/yuppie/organic crowd. I knew I had
to own this company. B & C was crowded just about any time
I walked in. Guess what ? When I researched B&C I found out
that B&C was bought out by WFMI, fairly recently. Before
that they had bought out a health food chain in California.
The health food business is going through a change. Moving
from your neighbourhood mom-N-Pop stores, or a chain of
mon-n-pop's that serve a city and surrounding surburbs, to
large national chains, i.e., consolidation. WFMI is right
in the thick of this, leading the way in making acquisitions
and growing. Their report laid out their plan for making
such acquisitions at the rate of some xx per year. I don't
recall what this number was. Also, they have recently
acquired another company called Fresh Fields.
I do not own this company simply because I am a strict
tech stock investor. The only time I will deviate from
this is when I see a compelling reason to buy something
like a WFMI. Secondly, my feeling is that the market
is not what I would call a high-growth market. The number
of folks that will shop in these kind of places is kind of
constant. The surburban, well-heeled, well-educated, volvo
driving crowd. In other words, a niche market. This by
no means implies that WFMI is not a good stock to own.
They have a real dynamite in Bread and Circus. If
I believed in the idea of diversification when investing
I would definitely consider WFMI to diversify my portfolio.
Sadly, I do not believe in diversification either. Also,
the business is a low barriers-to-entry kind of business.
I generally stay from investing in this. If this starts
getting lucrative, there is nothing that prevents a national
grocery chain like Kroegers, Safeway, Albertsons etc from
moving in. Nor, did I see a Sam Walton clone running this
company. In short, a good company, no red flags in the
financials, but not compelling enough for me to deviate from
the world of stocks that are moving us into the digital age.
I would be cautious before moving in after the kind of run
up it has had in the last 6-7 months. I still think it is a
great busines, great company, and even a great stock to own.
What I am even more impressed is that in the great meltdown we
have had in the world of small-cap stocks in the last 6 weeks
this stock has bucked the trend and moved up. That is awesome.
Given their acquistion strategy it may prove to be a gem in the
long run and the guy who started this and is still running this
may well turn out to be a Sam Walton clone. Who knows.
_rowan |
