NEW YORK, N.Y. – Whole Foods’ sales are being pinched by rivals as it prepares to launch an offshoot chain intended to court to new shoppers.
The Austin, Texas company said sales fell 3 per cent at established stores for the quarter ended April 10. That marks the third straight quarterly decline as it faces intensifying competition, including from traditional grocers and big box retailers that have expanded their organic and natural food selections.
For the current quarter through May 1, the company said sales were down 2.6 per cent at established locations. It noted that sales have been affected by its push to keep prices down.
The company has been trying to shake the chain’s “Whole Paycheck” image by offering more affordable prices that help it appeal to a broader customer base.
Later this month, Whole Food Market Inc. is also planning to open the first of its new “365” stores in Los Angeles. The company says the 365 stores will have a minimalist format, a smaller footprint and feature its house brand products of the same name. The chain is supposed to help the company cater to changing shopping habits, with people increasingly making multiple smaller trips to the store throughout the week.
Two other 365 locations are planned for this year. Whole Foods says it has 19 total leases signed for the chain so far.
Some fear the new chain might eat into sales at Whole Foods stores. But the company says there’s room for both chains, and that it still sees potential for 1,200 locations of its namesake stores in the U.S.
For its fiscal year, Whole Foods on Wednesday also cut its guidance, saying it expects earnings per share of up to $1.53. It previously said it expected earnings of $1.53 per share or more.
Whole Foods also now expects total sales to rise by 3 per cent for the year, reflecting a 2 per cent decline in sales at established locations. Previously, it had said it expected total sales, which includes new store openings, to climb 3 to 5 per cent.
Still, Whole Foods executives expressed confidence that sales trends would improve for the remainder of the year, citing efforts to offer digital coupons and online ordering. The company is also cutting costs, which helped it deliver a better-than-expected profit.
The company’s stock edged up 24 cents to $28.75 in after-hours trading.
For the quarter ended April 10, Whole Foods earned $142 million, or 44 cents per share. That was more than the 41 cents Wall Street expected.
Total revenue was $3.7 billion, shy of the $3.74 billion analysts expected, according to FactSet.