Amazon Brings More Price Cuts To Whole Foods In Time For Holidays

Amazon.com, Inc. AMZN is going full throttle in the grocery space: within three months of the completion of its acquisition of grocer Whole Foods Market, the company has announced a third round of price cuts.

The Analyst

KeyBanc Capital Markets analyst Edward Yruma has a Sector Weight rating on shares of Amazon.

The Thesis

Amazon announced its decision Wednesday to continue with price investments in the recently acquired Whole Foods stores, Yruma said in a note. (See Yruma's track record here.) 

This marks the third significant round of price cuts, with the items now incorporating select packaged goods, Yruma said. Price investments are expanding within the 365 Everyday Value line, the analyst side. 

With these cuts, the company intends to reach more people, Yruma said, citing comments by CEO John Mackey. As the holidays approach, the reduced prices for turkey items are unsurprising given ample industry supplies and historically low prices, the analyst said. 

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"Additionally, recent channel checks and industry sources indicate grocery retailers have lowered prices on dairy items (with some utilizing milk as a loss leader) in an effort to drive more in-store traffic," Yruma said. 

Citing data from KBCM store checks, KeyBanc said organic grocery items saw a 23 percent price reduction, on average, with the steepest cut of 42 percent for Tom's of Maine Deodorant Stick followed by Organic Short Grain Rice at 35 percent.

The Price Action

Amazon shares have been bouncing around the psychological resistance point of $1,000 of late and are now comfortably above the mark. The shares have notched up a gain of 50.89 percent year-to-date.

Amazon was up moderately in pre-market trading after losing 0.89 percent to $1,126.69 on Wednesday amid the price cut announcement.

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Photo courtesy of Whole Foods.