Investopedia: Does The Fresh Market Have A Real Chance

It may be hard to imagine that America really needs another food retailing concept. There are traditional supermarkets like Kroger (NYSE:KR) and Safeway (NYSE:SWY), organic-focused stores like Whole Foods (NYSE:WFM) and Earth Fare, value options like Aldi, and emerging concepts like Trader Joe's and Lowe's. And that's hardly the end of the list - major discount retails like Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) long ago moved into food retailing, and deep-value "dollar stores" and pharmacies like Walgreen (NYSE:WAG) have added more and more perishable food to their shelves. 

But wait, there's more. A renewed interest in eating food that hasn't sat on a truck for a week has sparked more interest in farmer's markets and community-supported agriculture programs. So this is the market that The Fresh Market (NYSE:TFM) is facing. While this company has been around for a while now (it started in North Carolina in 1982), it is relatively new as a public company and has just begun to build a significant presence outside of the southern U.S.

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Investopedia: MHS-ESRX Merger Will Force Intersting Choice In Washington

When Express Scripts (Nasdaq:ESRX) announced its intention to acquire Medco Health Solutions (NYSE:MHS) last week, it lit the fuse on what is likely to become one of the most far-reaching (if not most interesting) developments in health care in some time. At a bare minimum, this deal is going to force the current U.S. administration to make some very interesting choices when it comes to market competition and health care costs. 

The Deal  
To offer a quick review, Express Scripts is proposing to acquire its larger rival (in terms of prescription share) for total consideration of $71.36 at the time of the announcement. This consideration will be broken up between $28.80 in cash and 0.81 shares of Express Scripts. Assuming the deal goes through, it will deliver Medco shareholders a 28% premium to its pre-deal price and Medco shareholders will hold about 41% of the new company. 


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MHS-ESRX Merger Will Force Interesting Choice In Washington (ESRX, MHS, ABC, CAH, TEVA, UNH, WAG, CVS)

Investopedia: Waiting For A Clearance Sale On Ulta

As investors in retailers like Talbots (NYSE:TLB) or American Eagle (NYSE:AEO) can easily attest, this is not the easiest environment for retail. Oh true, conditions are better now than a year or two ago, but retailers really need to offer something distinctive in terms of product selection, pricing or shopping experience to draw in the crowds.

To that end, Ulta (Nasdaq:ULTA) seems to have hit on an attractive and differentiated concept - a beauty and personal care superstore format that is competitive on pricing while offering a wide selection and pleasant environment. Like lululemon (Nasdaq:LULU) and its own differentiated products and branding, Ulta is carving out an impressive growth trajectory while many of its rivals are struggling to hold on to what they have.



Keeping up the Momentum in Q1
Ulta's fiscal first quarter showed no slowdown in the company's momentum. Sales were up almost 21% on a reported basis, with same-store sales up more than 11%. There is a decided lack of direct comps to Ulta (one of the positives in the company's thesis), but anecdotal from the likes of Macy's (NYSE:M), Nordstrom (NYSE:JWN) and Kohl's (NYSE:KSS) would suggest that Ulta's performance is quite a bit stronger than the average department store cosmetics counter.


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Investopedia: Will Patience Pay For Walgreen Shareholders?

There is a lot about Walgreen (NYSE:WAG) that would seem to make it a no-brainer for long-term investors. It is the second-largest drug retailer in the country, and people always need drugs, right? Moreover, a Walgreen is within a short drive or walk for a rather large percentage of the country so there is a definite convenience aspect as well. On top of that, the company has generated fairly solid returns on capital and would seem to be transitioning to a point where its capital base is not so demanding on cash flow. 

A Second Quarter Bedeviled By Expectations  
If an investor did not know the expectations around Walgreen going into the earnings report, the 7% drop in the stock on Tuesday would not make all that much sense. After all, revenue did rise almost 9% this quarter and that beat the average estimate. Within those numbers, total comps rose more than 4%, with pharmacy comps up just slightly less than that. 


The problems, such as they are, came in the income statement. Gross margin actually declined a bit (five basis points), and that is a much-watched detail with this company. So, backsliding here is not great news. Operating income was a bit better though, as the company controlled the SG&A line and operating income grew a bit more than 11%. The company also picked up a penny from share buybacks, though, and that is how the company met the EPS target for the quarter. (For more, see The Bottom Line On Margins.)

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Cardinal Puts Some Cash To Work

Large piles of cash seem to tempt people into making bad decisions. At the corporate level, large cash balances often attract so-called "activist investors" looking for quick paydays or to embolden management into ill-timed buybacks or illogical acquisitions. That does not seem to be a problem with Cardinal Health (NYSE:CAH), though, as this large medical distributor has used almost $2 billion of its cash on hand to make a pair of acquisitions that seem to make a lot of sense. 

Kinray and Independent Pharmacies
Almost two weeks ago, Cardinal announced the acquisition of privately-held Kinray Inc for $1.3 billion in cash. A pharmaceutical distributor focused mostly on New York City and the Northeast U.S., Kinray will enhance Cardinal's exposure to independent pharmacies. While major chain pharmacies like Walgreen (NYSE:WAG) and CVS Caremark (NYSE: CVS) are a huge part of Cardinal's revenue base, the company makes a lot more money (on a margin basis) serving smaller customers, so expanding that customer base should be pretty accretive for Cardinal.

Buying Further into China ...
On Monday, Cardinal announced its latest deal - paying $470 million in cash (and assuming $60 million in debt) to acquire Zuellig Pharma China. Part of Zuellig Pharma (which in turn is part of the even larger Zuellig Group), Zuelling Pharma China is one of the largest distributors of pharmaceuticals and medical devices and supplies in China. Serving over 123,000 independent pharmacies and 49,000 provider locations, this Zuellig buy certainly enhances Cardinal's scale in what is almost sure to be a major market for medical distribution for some time to come. (For more, see Top Factors That Drive Investment In China.)

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Whole Foods Shoppers Out Of Hibernation

So much for the predictions that the Great Recession would produce a permanent thriftiness in American consumers. As the economy slowly crawls its way towards better health, Whole Foods (Nasdaq:WFMI) is seeing a solid recovery in its sales growth and dusting off the plans to roll out still more of these higher-end grocery stores. 


The Quarter In The Bag
By any standard, Whole Foods had a strong fiscal fourth quarter. Sales jumped almost 15% from the year-ago quarter, on a better-than-6% increase in square footage. Same-store sales were up a very healthy 8.7%, as traffic rose almost 7% and "basket" (basically, how much customers spent) was up about 2%

Strong as that was, the company did just as well below the sales lines. Gross margin ticked up 40 basis points and the company trimmed about 70 basis points out of SG&A. That fueled a 100 basis point bump in operating margin, translating into 46% operating income growth.


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