Whole Foods in a Whole Lot of Trouble

Whole Foods (NASDAW: WFMI) is the worst performing supermarket chain in 2008, according to Geezeo’s Main Street Spending Index. 

Whole Foods has had a cult like following amongst upscale urban professionals. Aspirational shoppers even mocked their own spending by nicknaming Whole Foods:  “Whole Paycheck”.  Given the economic instability though, customers are staying away from Whole Foods in droves. 

The table below compares the drop in average consumer spending per visit at major retail grocery chains year-to-date.  Whole Foods spending dropped 19% from January to October 2008.   The winner was value-branded Stop & Shop (AHONY.PK) . Stop & Shop had a slim 1.54% decrease in customer spending. Not bad for an economically volatile year. 

 

And the numbers get worse for Whole Foods. 

Not only does Whole Foods have the biggest percentage drop in spending — their customers are also spending the least per visit of all stores compared.  Bleak numbers for the high-end, healthy alternative. 

Whole Food’s customers spent just $28.30 on an average visit in October. By contrast, a perceived “value retailer” like Safeway (NYSE: SWY) had the largest spending average at $44.83 per visit in October. 

Publix (PUSH.OB) enjoyed the next largest spending average. The average user spent $41.86 per visit in October which is a 7.81% drop since January. 

Stop & Shop closely followed with average spending of $41.60 per visit.

Spend per visit at popular supermarket chains:

Yes, Whole Foods appears to be in a whole lot of trouble.

Disclosure: no positions

Comments

[mollytjm:]

and they're trying to expand into a shrinking market and bad economy. There's a huge store of theirs going up in a mall near me and i look at it and wonder how it will ever survive. 3 nearby food stores have pretty good sized 'organic/healthfood' sections. the place was supposed to be open already but it looks like it will miss Thanksgiving..not a smart thing for a new grocery store. obviously something is wrong here.

2008 Nov 13 12:03 PM

[JavaJuozas:]

Thinking about this investment, people want to eat healthier, I agree there are other supermarkets that have Organic/health food, however, not as wide of a variety as Whole Foods. We went by a Whole foods here in NJ and it was still hopping. I look at this stock as an investment for the future because regardless of the market, "everyone's got to eat", so why not eat healthy?

2008 Nov 13 12:21 PM

[all4rio:]

Whole Foods would recover very quickly if more consumers paid attention to how badly the Department of Agriculture and the FDA perform their jobs.
Regular chickens eat animal waste. Just think about that the next time you buy one of those regular birds. And as for beef, one in a very large number is tested for signs of Mad Cow disease. Don't ever ask what those poor cows are eating, you'll throw up.
Some chain markets have what they call "natural" beef which means
they have no added hormones. But they are not vegetarian fed. Cows are vegetarians. What cows are often fed is the remains (corpses) of other dead cows. Nice. A thick juicy slab of corpse, medium rare please!
And then there are the eggs. Not vegetarian fed hens also eat garbage.
So, for Whole Foods to recover, all we need is another food poison
scare or some real numbers from the government on the real occurrences of Mad Cow disease.
Whole Foods is a great enterprise. Responsible, wholesome, but, pricey.
So, just go more often and buy a little less. You won't wake up at 50 with some hideous gastrointestinal or cerebral disease. Read the labels before you pay out your cash.

2008 Nov 13 05:14 PM

[Money Mike:]

If Whole Foods can maintain a profit at lower volume through this economic funk, it will likely prosper in normal economic times. It is the best store in the organic grocery segment. I would rather have their strategy than one of high volume at low margins.

2008 Nov 18 11:46 PM

[Mer:]

I am getting tired of magazines and other news journals telling people to stay away from Whole Foods during these hard times. People still pay for expensive clothing, makeup, tech gadgets, and such, and they should be continuing to put money into their health and the health of their families and cut back on the luxuries. Good health is not a luxury, and you can't enjoy other things if you feel like crap. Sadly, New York magazine posted an article comparing Whole Foods to a couple other grocery chains and Costco, and they did price comparisons on same products. So, if Progresso chicken soup cost $1.69 at a regular grocery store, then it was shown as $1.97 at Whole Foods. Guess what? Whole Foods does not contain Progresso soup, or Duncan Hines cake mix, or Fruit Loops, etc. They should have said that they were comparing similar products. I would rather pay $.30- 1.00 more at Whole Foods per item and know I am getting natural, healthy, clean ingredients for my body instead of artificial additives, like coloring and flavors, and MSG, so that article was very deceiving, and very wrong. I also want to point out that Whole Foods has many more affordable private label items now, so anything from canned tomatoes, soups, dairy products, eggs, frozen meals, pasta, tofu, almost anything, you can find it under the Whole Foods brand name (listed as 365, 365 Organic, and other Whole Foods brand names). People need to pay more attention to their health and what Whole Foods has to offer. You can find very high quality foods, health care, vitamins/supplements, body care items, etc., all under the Whole Foods name at very reasonable prices. One other tip- stick with organics, not for everything, but for the important things, like spinach, berries, apples, and tomatoes. You will save money buy buying organic items only when necessary. Do your research, keep yourself healthy, and when you find out how great you feel, you will be cheerful, calm, peaceful, and able to clearly see why purchasing that next pair of Chanel shoes is insane, and your health is so much more important.

2008 Nov 19 09:37 AM

[commentastic:]

Whole Foods is not a "Health Food Store" -- most of the products, especially in the prepared foods section, are extremely high in fat and sodium. They even use high-fructose corn syrup in some of their sauces. WF never had the guts to stop selling imports from China although Trader Joe's did. Buy Xmas candy canes at WF and you're getting nothing but marked-up Chinese junk. The risk of bacterial contamination in many foods is higher than average due to excessive handling in order to fake out the customer as if all food were made in the store "fresh daily" as printed on labels even though most food is shipped from centralized kitchens and re-wrapped without modern safety seals. When WF sold beef with e.coli it said "Oh my, we didn't know we were doing business indirectly with Nebraska Beef" ... Shouldn't SOMEONE know at WF prices? I'm certain they did. WF also sells mostly conventional - NOT organic - products - and sells numerous brands containing GMOs. WF supplements are mostly anti-science quackery with high markup. I ask, when it comes to your health, should you believe someone who has dedicated their life to medical science, or the college flunkie that works at your local WF ?

2008 Nov 19 05:07 PM

[Ken G:]

I can understand why whole foods may struggle with the current economy right now, but it is a great buy at 10 per share. It may take a year for it to truly go up, but no other national and natural grocer exists on a level with whole foods. Trader Joes is only out East, Fresh Market is much smaller and lacks a lot of what whole foods carries (no supplements etc.), and Wild Oats is now part of whole foods. Whole foods is run expertly and has a great reputation. In response to the last comment, of course not everything at WF is good for you. It's up to the consumer to figure that out. WF gives a hell of lot more healthy options that most though.

2008 Nov 25 02:12 PM

[sdmuttley:]

people shop at Whole Foods everyday that's why customers buy less per visit.

2008 Dec 18 02:13 PM

[dmcsweetpea:]

Your absolutlely right. I used to work for them when they took over Wild Oats and ran that into the ground, pissed off our customers with their "health food" and ultimately shut our store down leaving 50 people out of a job.

On Nov 19 05:07 PM commentastic wrote:

> Whole Foods is not a "Health Food Store" -- most of the products,
> especially in the prepared foods section, are extremely high in fat
> and sodium. They even use high-fructose corn syrup in some of their
> sauces. WF never had the guts to stop selling imports from China
> although Trader Joe's did. Buy Xmas candy canes at WF and you're
> getting nothing but marked-up Chinese junk. The risk of bacterial
> contamination in many foods is higher than average due to excessive
> handling in order to fake out the customer as if all food were made
> in the store "fresh daily" as printed on labels even though most
> food is shipped from centralized kitchens and re-wrapped without
> modern safety seals. When WF sold beef with e.coli it said "Oh my,
> we didn't know we were doing business indirectly with Nebraska Beef"
> ... Shouldn't SOMEONE know at WF prices? I'm certain they did.
> WF also sells mostly conventional - NOT organic - products - and
> sells numerous brands containing GMOs. WF supplements are mostly
> anti-science quackery with high markup. I ask, when it comes to
> your health, should you believe someone who has dedicated their life
> to medical science, or the college flunkie that works at your local
> WF ?

Jan 02 07:41 AM

[chris d:]

I agree 100% , because I work at WF, and as manager ,I witness things that are unbelievable..what they say and what they do are two different things.


On Nov 19 05:07 PM commentastic wrote:

> Whole Foods is not a "Health Food Store" -- most of the products,
> especially in the prepared foods section, are extremely high in fat
> and sodium. They even use high-fructose corn syrup in some of their
> sauces. WF never had the guts to stop selling imports from China
> although Trader Joe's did. Buy Xmas candy canes at WF and you're
> getting nothing but marked-up Chinese junk. The risk of bacterial
> contamination in many foods is higher than average due to excessive
> handling in order to fake out the customer as if all food were made
> in the store "fresh daily" as printed on labels even though most
> food is shipped from centralized kitchens and re-wrapped without
> modern safety seals. When WF sold beef with e.coli it said "Oh my,
> we didn't know we were doing business indirectly with Nebraska Beef"
> ... Shouldn't SOMEONE know at WF prices? I'm certain they did.
> WF also sells mostly conventional - NOT organic - products - and
> sells numerous brands containing GMOs. WF supplements are mostly
> anti-science quackery with high markup. I ask, when it comes to
> your health, should you believe someone who has dedicated their life
> to medical science, or the college flunkie that works at your local
> WF ?

Feb 01 01:45 AM