Longtime investment manager Jim Chanos has declared that he is short on all companies in the grocery sector. The legendary short seller said on Tuesday that this has been his position even before Amazon took over Whole Foods on August 28, for $13.7 billion.
During CNBC’s “Halftime Report,” Chanos said that Aldi and Lidl, the giant German retailers should be watched as they were already making serious moves to disrupt the grocery industry long before Amazon contemplated buying Whole foods.
Speaking at the 2017 Delivering Alpha conference on “Halftime Report,” Chanos said that investors who are keen about the grocery market should be more alarmed at the expansion motives of the two chains more than Amazon’s actions.
The two retail chains have been increasingly eyeing new markets with Aldi unveiling plans to expand globally in the next five years by spending $5 billion. Lidl on the other hand wasn’t left behind by opening its very first U.S. grocery stores in June. The new 10 locations are spread across the Carolinas and Virginia.
Chanos, the founder and managing partner of Kynikos Associates added that the “razor-thin margins” that are standard in the grocery industry, the declining returns and Amazon’s acquisition of Whole Foods all point to a bleak future. He cautioned that the model for the East Coast and South on was being disrupted in a big way and that the grocery wars in the U.S. will only get hotter.
Chanos remained categorical that Amazon’s entry into the grocery arena was the last straw for a struggling industry.