Whole Foods Market (NASDAQ:WFM), an organic food retailer, announced plans to start a new chain of smaller, more value-focused shops next year while reporting a slowdown in quarterly same-store sales growth. Shares tanked.
The Austin, Texas-based company said the new chain will have lower prices, cost less to run.
The new chain will be “hip, cool, and tech-oriented,” co-founder and co-chief executive officer John Mackay told the media during a conference call discussing its second-quarter earnings.
Whole Foods, known for its organic, natural food selection, clean stores and large displays of bright, fresh produce, has been losing traction recently as organic and fresh foods have become more popular at mainstream grocery chains.
Whole Foods has more than 400 stores in the U.S., Canada and the United Kingdom,and has plans to open at least 100 more.
Whole Foods said its same-store sales, a closely watched performance gauge for retailers, rose 3.6 percent for the fiscal second quarter ended April 12 from a year earlier. That was slower than the 4.5 percent growth in the first quarter and less than the 5.3 percent gain expected by analysts polled by Consensus Metrix, Reuters reported.
Whole Foods said second-quarter sales grew to $3.65 billion from $3.32 billion but fell short of the $3.71 billion forecast by analysts.
Profit for the quarter rose to $158 million, or $0.44 per share, from $142 million, or $0.38 per share, a year earlier.
The company reiterated its 2015 forecasts for sales growth of more than 9 percent and same-store sales growth in the low to mid-single digit percentages.
Shares plunged 9 percent to $43.42 at 9:53 a.m. in New York, extending this year’s slump to 13 percent.