Stocks of major food retailers dropped Thursday after Amazon said Whole Foods Market will cut prices on many of its best-selling grocery products in four days.
Stocks of major food retailers collapsed Thursday, erasing at least $10 billion in market value, after Amazon said Whole Foods Market will cut prices on many of its best-selling grocery products in just four days.
That’s when Jeff Bezos’ company is set to close its $13.7 billion acquisition of the high-end food retailer, the largest in Amazon’s history.
Shares of Kroger fell more than 7 percent, Wal-Mart lost nearly 2 percent, Target fell almost 4 percent, Costco lost 4.6 percent, Supervalu and Sprouts Farmers Markets each fell more than 6 percent.
Their combined decline erased about $10 billion in market value in a single day, according to CNBC analysis of FactSet data.
« To get started, we’re going to lower prices beginning Monday on a selection of best-selling grocery staples, including Whole Trade organic bananas, responsibly-farmed salmon, organic large brown eggs, animal-welfare-rated 85% lean ground beef, and more, » Jeff Wilke, CEO of AmazonWorldwide Consumer, said in a release. « And this is just the beginning — we will make Amazon Prime the customer rewards program at Whole Foods Market and continuously lower prices as we invent together. »
Whole Foods has more than 450 locations and is known for selling higher-priced, often organic, produce, while retailers like Wal-Mart have emphasized lower prices and savings for customers.
For example, bananas can cost 99 cents a pound at Whole Foods versus 49 cents at Wal-Mart.
« Over the longer term, I do see Amazon is going to be more competitive in this world, » Joe Feldman, analyst at Telsey Advisory, said on CNBC’s » Power Lunch . » He did note that Wal-Mart and Costco’s share price decline Thursday was « a bit of an overreaction » because of the difference in customer demographic.
Amazon traded 0.2 percent lower amid a broader market decline, but held gains of 27 percent for the year. Whole Foods traded 0.7 percent higher.
Of the six stocks listed above, only Wal-Mart and Sprouts have gained this year, up 13 and 17 percent, respectively.
Consumer staples fell more than 1 percent in afternoon trading, tracking for the group’s worst day since Nov. 30. Kroger was one of the biggest decliners in the stock sector.
— CNBC’s Lauren Thomas contributed to this report.
