After reporting second-quarter results last week, some investors fled from shares of Whole Foods Market (NASDAQ:WFMI) like organic fans from a barbecue sorely lacking in veggie burgers or free-range chicken. However, one might wonder whether those investors are being too shortsighted.

True, Whole Foods' net income dropped 11%, although sales increased 11.6% to $1.5 billion in the quarter. The company's profit took a hit as it accelerated store openings, with preopening and relocation costs coming out to $15.6 million, or $0.07 per share. (Also note that the Easter holiday positively affected this quarter this year, as opposed to next quarter.)

We all already knew that this was going to be an important year for Whole Foods as it steps up its competitive plans, so panic related to the earnings report, which included costs related to aggressively opening new stores, seems shortsighted to me. In the press announcement, Whole Foods' John Mackey said some of the new locations are "incredibly exciting stores that will allow us to redefine the marketplace and further differentiate our shopping experience from other food retailers." It seems to me that at this juncture, becoming complacent and boosting profits for a couple of quarters would be far worse for the retailer's long-term strategy and leadership positioning.

These are trying times for Whole Foods, although management seems to view this as a challenge that will make it stronger, while many investors seem to view the current climate in a far more negative light. Whole Foods not only has to compete with wholly organic rivals like the small independents and outfits like Trader Joe's (although in the conference call, management pointed out that Whole Foods has co-existed fine with TJ's), but it's also increasingly competing with traditional retailers like Wal-Mart (NYSE:WMT) and Safeway (NYSE:SWY), which have seen the growth potential in organic goods and started shifting their merchandise to reflect the demand. Safeway is in the process of gussying up its stores to a more gourmet feel.

In addition to increasing its store openings, Whole Foods wants to acquire organic supermarket rival Wild Oats (NASDAQ:OATS) to compete more aggressively. Interestingly, it appears that the Federal Trade Commission may be preparing to push back, although it hasn't yet decided to challenge the deal. I can't say I quite understand why anticompetitive concerns are cropping up. In case regulators haven't noticed, Whole Foods now seems to be competing with everybody. Whole Foods may be the leader in the organic movement, but given the current competitive landscape and the nature of the organic business, it's anything but monopolistic.

Considering management's strong track record and philosophy that sets it apart from wannabe rivals, I believe Whole Foods Market can rise to the challenges at hand as it seeks to widen its lead and prepare itself well for the long haul. Right now, Whole Foods may look increasingly inexpensive, historically uncharacteristic of this stock. But that reduced price also comes with another drag -- a whole lot of negative sentiment amongst some investors.  

Whole Foods Market is a Motley Fool Stock Advisor recommendation. Wal-Mart is a Motley Fool Inside Value pick. Free 30-day trials of both newsletters are available.   

Fill your cart with some related Foolishness:

Alyce Lomax owns shares of Whole Foods Market. The Fool has a disclosure policy that is a friendly addition to any barbecue.