Whole Foods dropped after missing expectations. Shares of Whole Foods (WFM) plunged more than 10% Thursday after the high-end natural grocery chain reported sales and profits that missed analysts' forecasts. Its outlook did not impress investors either, writes CNN Money. Whole Foods has been cutting prices to try and counter its bad reputation for being too expensive. But doing that has hurt its profit margins.
Making matters worse, many people STILL refer to the company as Whole Paycheck. It doesn't help that Whole Foods was found in late June to have been overcharging customers for some packaged, weighed goods in New York City. Co-CEOs Walter Robb and John Mackey have apologized for the mispricing and blamed it on human error.
Whole Foods said Wednesday that sales at established stores rose 1.3% in the three months ending July 5—its weakest growth since 2009 during the economic downturn, according to the Wall Street Journal. The company has struggled to keep customers amid tough competition from smaller imitators and big mainstream retailers such as Target Corp. that are stocking local and organic items.
In the past two years, the Austin, Texas, chain has been lowering its prices to compete in a tougher era, after having the natural-and-organic-food market cornered for decades. It expected sales to take a hit initially, but believed it would attract more shoppers, eventually accelerating its growth. But it still hasn’t reached that turning point, said Edward Jones analyst Brian Yarbrough. “The growth rate has slowed massively,” he said, “yet they are still opening more stores.” He said the New York pricing issue isn’t the only reason for its same-store sales growth slowing to 0.6% in the first few weeks of the current quarter. “People are starting to lose faith in the management team,” he said.