In June, Costco Wholesale (COST.US) fell more than 15% in reaction to the news Amazon.com (AMZN.US) is acquiring Whole Foods Market (WFM.US). We think Costco’s competitive advantage is durable and thus initiated a position.
Whole Foods vs Costco
In the US, Costco has been taking market share from Whole Foods for a long time; this is manifest in like for like sales (LFL) where Whole Foods has reported declines for 7 straight quarters, yet Costco continues to report positive LFL results. [Read more…]