Can Whole Foods win back trust of consumers?
NEW YORK (CNNMoney) — There has been a whole lotta shakin’ goin’ on at Whole Foods lately. And not in a good way.
Investors have shunned the stock … and shoppers don’t seem to be making as many trips to the organic grocery chain either.
Whole Foods is expected to report lousy results for the last three months of 2015 — the company’s fiscal first quarter — after the closing bell on Wednesday.
Wall Street is predicting that same-store sales, arguably the most important measure of health for a retailer, will fall for the second straight quarter.
Shares of Whole Foods are down 45% over the past 12 months. The company has been unable to shake off its Whole Paycheck reputation — the perception that its products are way overpriced.
Whole Foods no longer has the natural market to itself. It faces tough competition from much bigger retailers such as Walmart, Target, Costco and supermarket china Kroger as well as organic rivals like Trader Joe’s, Sprouts and Fresh Market.
Making matters worse, the company’s image was damaged last year following a slew of negative publicity.
Whole Foods was accused of overcharging customers for prepackaged items in New York City. The company eventually apologized and settled with regulators in the Big Apple. But sales took a big hit as a result of the allegations.
It didn’t help that Whole Foods had to deal with all this negative baggage (paper not plastic please!) last year.
A listeria scare: Whole Foods recalled blue cheese and various salad bar items in two separate incidents last October.
A cheap labor scandal: Whole Foods decided to stop selling products made from a supplier that used inmate workers after an activist pointed out how poorly the prisoners were being paid.
Asparagus water: An employee at a Whole Foods near L.A. mistakenly put 3 sticks of asparagus in 16-ounce bottles of water … and slapped a $5.99 price tag on them. HBO’s John Oliver had a field day with this. (CNN and HBO are corporate cousins.)
So investors are hoping that Whole Foods can put all this aside them. It needs to be known again as the place to go for quality boneless pork butt … and not as the butt of jokes from late night comedians.