We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Grocery Stocks (KR, COST) Sink On Amazon-Whole Foods Approval
Read MoreHide Full Article
Shares of several grocery store chains, including Kroger and Costco, tumbled on Thursday after Amazon’s purchase of Whole Foods became official.
Deal
The Federal Trade Commission finally approved the online retail behemoth’s purchase of the organic grocer, which was first announced in mid-June. The FTC determined Amazon’s acquisition passed U.S. antitrust laws, shortly after Whole Foods’ shareholders formally approved the $13.7 billion deal.
“Based on our investigation, we have decided not to pursue this matter further,” the Commission said in a statement late Wednesday. “Of course, the FTC always has the ability to investigate anticompetitive conduct should such action be warranted.”
Initial Plans
Aside from adding roughly 470 organic grocery stores in North America and the United Kingdom to its ever-growing list of diversified assets, Amazon wasted little time in making its initial Whole Foods plans known.
The Texas-based chain grew in popularity because of its wide selection of natural and organic offerings, but they often came with steep price tags. So naturally, one of Amazon’s first major steps, which will begin as soon as Monday, is to lower Whole Foods’ prices—and soon, it will make Amazon Prime the grocery store’s customer rewards program.
“Everybody should be able to eat Whole Foods Market quality – we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards,” CEO of Amazon Worldwide Consumer Jeff Wilke said in a statement.
Lost In The Super Market
Whole Foods is far from the biggest grocery store chain in the U.S., and its deal with Amazon will not change that—at least not in the foreseeable future. But the FTC approval sent investors fleeing from grocery store stocks as long-term disruption in the grocery sector seems possible, if not inevitable.
Shares of Costco (COST - Free Report) fell by over 5% on Thursday, while Target, (TGT - Free Report) with its large grocery business, dipped by 3.99%. Kroger (KR - Free Report) , which also owns multiple grocery subsidiaries, share prices tanked by 7.71% and nearly touched its 52-week low.
Less well-known chains such as Casey's General Stores (CASY - Free Report) , Weis Markets (WMK), and Village Super Market (VLGEA - Free Report) all saw their stock prices fall by over 1.60%. Shares of Ingles Markets (IMKTA - Free Report) fell by 3.54%, while Smart & Final Stores dipped by 2.76%.
Sprouts Farmers Market (SFM - Free Report) saw its stock price crash 6.95% and shares of SUPERVALU Inc. dropped by 6.60%.
Grocery Store chains don’t likely need to fear for their short-term stability or even viability. But, if the industry does not begin to make changes to their business models going forward, Amazon’s Whole Foods and its new lower organic food prices could make life a lot harder—especially if investors continue to flee the allies.
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today. Learn more >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Grocery Stocks (KR, COST) Sink On Amazon-Whole Foods Approval
Shares of several grocery store chains, including Kroger and Costco, tumbled on Thursday after Amazon’s purchase of Whole Foods became official.
Deal
The Federal Trade Commission finally approved the online retail behemoth’s purchase of the organic grocer, which was first announced in mid-June. The FTC determined Amazon’s acquisition passed U.S. antitrust laws, shortly after Whole Foods’ shareholders formally approved the $13.7 billion deal.
“Based on our investigation, we have decided not to pursue this matter further,” the Commission said in a statement late Wednesday. “Of course, the FTC always has the ability to investigate anticompetitive conduct should such action be warranted.”
Initial Plans
Aside from adding roughly 470 organic grocery stores in North America and the United Kingdom to its ever-growing list of diversified assets, Amazon wasted little time in making its initial Whole Foods plans known.
The Texas-based chain grew in popularity because of its wide selection of natural and organic offerings, but they often came with steep price tags. So naturally, one of Amazon’s first major steps, which will begin as soon as Monday, is to lower Whole Foods’ prices—and soon, it will make Amazon Prime the grocery store’s customer rewards program.
“Everybody should be able to eat Whole Foods Market quality – we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards,” CEO of Amazon Worldwide Consumer Jeff Wilke said in a statement.
Lost In The Super Market
Whole Foods is far from the biggest grocery store chain in the U.S., and its deal with Amazon will not change that—at least not in the foreseeable future. But the FTC approval sent investors fleeing from grocery store stocks as long-term disruption in the grocery sector seems possible, if not inevitable.
Shares of Costco (COST - Free Report) fell by over 5% on Thursday, while Target, (TGT - Free Report) with its large grocery business, dipped by 3.99%. Kroger (KR - Free Report) , which also owns multiple grocery subsidiaries, share prices tanked by 7.71% and nearly touched its 52-week low.
Less well-known chains such as Casey's General Stores (CASY - Free Report) , Weis Markets (WMK), and Village Super Market (VLGEA - Free Report) all saw their stock prices fall by over 1.60%. Shares of Ingles Markets (IMKTA - Free Report) fell by 3.54%, while Smart & Final Stores dipped by 2.76%.
Sprouts Farmers Market (SFM - Free Report) saw its stock price crash 6.95% and shares of SUPERVALU Inc. dropped by 6.60%.
Whole Foods stock gained 0.72%, but Amazon’s (AMZN - Free Report) stock price took a hit and closed down 0.58% on Thursday (also read: Here's The Reason For Amazon's Recent Stock Pullback).
Bottom Line
Grocery Store chains don’t likely need to fear for their short-term stability or even viability. But, if the industry does not begin to make changes to their business models going forward, Amazon’s Whole Foods and its new lower organic food prices could make life a lot harder—especially if investors continue to flee the allies.
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today. Learn more >>