Office Depot Jumps, but Whole Foods Market Slides After Hours

The blue chips fell 130 points on a variety of triggers, while Whole Foods tumbled after hours. Earlier, Office Depot shares jumped on earnings.

May 6, 2014 at 10:00PM

Stocks sank today as tensions in Ukraine heightened and some big names including AIG and Twitter fell, putting pressure on their respective sectors. The Dow Jones Industrial Average (DJINDICES:^DJI) shed 130 points or 0.8% with drugmakers Merck and Pfizer again falling the furthest. The two declined as Merck sold its consumer health division, which includes brands such as Afrin cold remedy, for $14.2 billion, to Bayer, and AstraZeneca continued to signal that it was not interested in being acquired by Pfizer, outlining a plan to make sales grow to $45 billion within 10 years to help convince shareholders the company was better off as an independent entity.  Outside the Dow, results weren't any better, as the S&P 500 lost 0.9% and the Nasdaq fell 1.4%.

Only one economic report was released today, the March international trade report, which showed the trade deficit narrowing slightly from $41.9 billion to $40.4 billion, essentially in line with analyst estimates, but the figure was lower than government estimates in the first-quarter GDP report, meaning that figure could be revised downward to show a contraction. That would mark the first time the economy had shrunk in three years, though much of the blame has been pinned on poor winter weather, and data has shown a resurgence since then.



Turning to individual stocks, Whole Foods Market (NASDAQ:WFM) plummeted after hours, falling 14% on a rotten earnings report. The organic grocery chain missed the mark in nearly every category, reporting revenue, earnings, and guidance all below expectations. Though Whole Foods pioneered the organic foods segment it still leads, the company has come under pressure from increased competition, including mainstream grocers such as Wal-Mart and Kroger, which have entered the high-growth organic business. Whole Foods is still growing, but perhaps not at a rate that warrants the stock's high price tag. Revenue increased 9.7% in the quarter to $3.32 billion, below the consensus at $3.34 billion, as same-store sales improved 4.5%, a respectable clip. Net income, however, was flat at $0.38 per share as food costs rose and its gross and operating margins fell by 50 basis points. Analysts had expected a profit of $0.41 per share. The company also dialed down its full-year EPS guidance from a range of $1.58-$1.65 to a range of $1.52-$1.56, below the consensus at $1.61. With sales growing at just around 10%, it may be hard for the stock to justify a P/E close to 30.

Moving in the opposite direction today was Office Depot (NASDAQ:ODP), whose shares jumped 16% after the company reported earnings and announced a store closure plan this morning. The office-supply retailer posted an adjusted EPS of $0.07 against expectations of $0.03, and said that sales trends improved throughout the quarter. It also said it will close at least 400 of its nearly 2,000 stores in the U.S., adding $75 million to annual cost savings from its merger with Office Max. Still, overall sales fell 5% on a 3% decline in same-store sales, indicating continued problems for a contracting industry. Looking ahead, management said that "market trends will remain challenging," but lifted its operating income guidance to at least $160 million from at least $140 million because of early realization of cost savings. Office Depot's prospects look improved after today's report, but I'm still concerned about long-term profitability in a declining industry.

Will this stock be your next multibagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with amazing potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303%! You don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends AIG, Twitter, and Whole Foods Market; owns shares of AIG and Whole Foods Market; and has options on AIG. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers