I own WFMI and OATS. The increase ion WFMI corresponds with a decrease in OATS stock price. This is after WFMI opened in Boulder and announced new stores in other OATS strong areas, such as Denver and Santa Fe. These new store that go directly against OATS have lower prices than other WFMI locations and force OATS to lower their prices. The market seems to think that WFMI is the dominant gorrilla and is rewarding it as it punishes the number two player. As a result, OATS P/E is only 34, compared to 46 for WFMI.
Also, based on the most recent quarterly report, OATS same store sales growth was only half that of WFMI's. This is recent; generally OATS has been growing faster than WFMI. Estimates show OATS profits growing 30% compared to 25% for WFMI.
So it looks like we may have a coke/pepsi battle starting. I didn't think that would happen yet because there are still many area of the country underserved by natural food stores, thus plenty of growth left for all players. This seems like a pre-emptive strike by WFMI, but it could end up hurting both players if they expend resources fighting each other rather than going after the huge remaining unserved share.
In Southeast Florida, both OATS and WFMI have three stores, but they are so far apart that none are affecting the other at this point. All are doing well. Boulder and Santa Fe are small market areas (but extremely natural-food oriented), the stores are close together. I would be very interestesd to know how WFMI coming in is affecting OATS.
My impression is that OATS is more upscale than WFMI and more-hard-core health food oriented. (I get this impression because the 365 line has white sugar while OATS private label does not). WFMI has gone to a big box (40,000 square feet) format, while OATS stores are smaller (maybe 20,000 square feet). It seems that, face to face, the 40,000 square feet format may win.
I would like to hear what other SI readers think about OATS versus WFMI. If you have been in both, which do you prefer as a customer? |
