Natural foods retailer Whole Foods Market
Last week, however, the company jumpstarted its growth in two ways with one move. Whole Foods is moving to acquire the U.K.'s Fresh & Wild for roughly $38 million in stock. Fresh & Wild, which operates six stores in the London area (with a seventh on the way) and one in Bristol, would be the company's first venture outside the U.S. and Canada. (Smaller competitor Wild Oats
Whole Foods has largely been built by acquisitions -- management considers them a key part of the company's growth strategy. This makes good sense: It can leave others to identify and serve new markets before moving in itself and laying its information systems, vendor relationships, and marketing muscle on top of the already-operational stores and customer bases.
This deal certainly seems like a logical strategic move as the company looks for new growth opportunities. Also worth noting, the small size of the deal means Whole Foods is unlikely to face the regulatory trouble Wal-Mart
Financially, meanwhile, the purchase isn't expected to impact earnings this fiscal year: Fresh & Wild had less than $30 million in calendar 2003 sales, while Whole Foods did $3.1 billion in fiscal 2003 (ended Sept. 28) revenues.
Whole Foods agreed to pay $38 million for eight stores, one not yet operational, that average 5,200 square feet a piece. Opening eight new stores in the U.S. would probably run Whole Foods some $60 million before inventory. They'd have 10 times more square footage here, but turn in far less in revenue per square foot. (London is crowded -- it's rich in customers, but there's not a lot of big-box space.)
In short, this development is worth watching in large part because these new U.K. stores represent a departure from the type of domestic expansion Whole Foods has done lately.
Poke around Whole Foods' latest move on our Whole Foods Market discussion board.
Dave Marino-Nachison can be reached at email@example.com.