Whole Foods Can't Do It Alone (In Gowanus)
Gowanus Whole Foods isn’t dead, as we speculated last month, it’s just very badly burned. The supermarket needs a developer-partner to finish the job at Third and Third, reports the Brooklyn Paper. But what does that mean? A mini-mall? Another Toll Brothers-style mixed use development? The Fairway model, with residential units above? Nobody knows, since…
Gowanus Whole Foods isn’t dead, as we speculated last month, it’s just very badly burned. The supermarket needs a developer-partner to finish the job at Third and Third, reports the Brooklyn Paper. But what does that mean? A mini-mall? Another Toll Brothers-style mixed use development? The Fairway model, with residential units above? Nobody knows, since this mysterious developer isn’t named, and since the rezoning of the area is still in progress; if the current plan goes through, the Whole Foods site would be restricted to commercial and manufacturing. Not surprisingly, the root of the problem is money. To get a loan, you need an enormous amount of cash, said commercial broker Chris Havens. It’s not worth it to them to put cash in the building.
Whole Foods Needs a Partner on Gowanus Job [Brooklyn Paper]
Gowanus Whole Foods Looking for Breeding Partner [Curbed]
Photo by mhwolk.
Never going to happen….the location is simply too difficult to build on profitably
another Thanks to Dave.
A few of us here have the skills, um…to pay the bills.
Thanks Dave. Nice to hear from somebody who has a better grasp of these things.
First of all, both market cap ($1.6B today) and revenue ($7.9 B over the Last 12 Months) have nothing to do with profitability and ability to expand.
here’s how cash flow works: These are the Latest 12 Months numbers…
Net Income $ 146 MM
+ Depreciation 237 MM
– Dividends (106)MM
———
Cash Flow 277 MM
They have been investing (capital expenditures) at the rate of $536 MM over the latest 12 months so that means that cash flow does not cover capital expenditures and they will need to continue to borrow. Long-term debt has risen steadily over the past 12 months from $970 MM to $1,094 MM with Equity at $1,504 MM. Not that risky a capital structure but they are surely seeing a few things:
A slowdown at the top line
Higher operating costs
Tougher credit markets
I didn’t bother to check to see what they’ve said about reducing store openings or closing some existing stores but the current level of profitability and the current capital structure ARE NOT a hinderance to going forward with this project. That said, I’m sure its the most problematic of all the potential locations for issues like DOB and DEP.
Two tidbits from the Financial Times:
Whole Foods Market Inc (WFMI:NSQ) set a new 52-week low during today’s trading session when it reached 11.44. Over this period, the share price is down 75.55%.
Over the last five years Whole Foods Market Inc (WFMI:NSQ) consistently underperformed the Dow Jones Industrial Average index.
apologies due…
I found the article online and cited todays date from their ledger. My bad.
But I see my original $5 bil revenue is $6.5. But whats a bil and a 1/2 amongst good friends?
It will take a partnership – like everything is trending these days – reducing exposure and increasing the equity to get a loan. Whole Foods will put up the land as collateral and a developer will build it with some cash and more borrowed money. They work out a deal where they both reduce risk and hopefully profit something in the end with different ownership percentages and then they can sell or hold their stake in the end. This will happen but it will take more time.
? Article is from 2006. ?
It quotes their share price at $62. It is currently $11.
Oh, and I’m an idiot cause their july quarter was $34,000,000, not $34,000.
Revenue is a dicey thing. In 2007 they had 182 million net income with 6.5 billion in revenue.
It just doesn’t seem like they have the cash flow to fund expansion without borrowing or having partners.
Note the date on that article: May 15, 2006.
A bit out-of-date, no?