Whole Foods Pulls Back On Expansion And Announces Store Closures

This week, Whole Foods Market announced plans to close nine stores and table an expansion it announced last year. The retailer posted its sixth-straight quarter of same-store sales declines.

The natural food grocer had planned to expand to 1,200 locations in the U.S., more than doubling its nearly 470 locations throughout the U.S., UK and Canada. But now Whole Foods will wait to see how the roll-out of around 100 locations goes before revisiting expansion talks. 

Lately, competition has been fierce for the high-end grocer, Fortune reports. On a call with investors, Whole Foods CEO John Mackey said, “the more conventional, mainstream supermarkets have upped their game … the world is very different today than it was five years ago.”

Whole Foods will close two stores each in Colorado and California along with locations in Chicago, New Mexico, Utah, Arizona and Georgia. Mackey said the stores set to close are older, smaller locations that Whole Foods had acquired. Many were near a larger, more modern Whole Foods or occupied spaces with leases that were due to expire. Two leases were terminated. Whole Foods said it would take a $30M charge in the second quarter related to the store closings.

In an effort to stabilize profits, the chain is turning to consumer data and promotions. A new partnership with UK-based Dunnhumby, a consumer data subsidiary of Tesco, aims to help Whole Foods improve merchandising and offers to loyal customers. Cost-cutting efforts are also underway and the grocer is working to slash operating costs by $300M through layoffs and centralizing operations. 

Last year the chain pushed to draw customers back by aggressively lowering prices and experimenting with value-driven Whole Foods 365 concepts, specifically targeting areas with large hipster populations. So far the company has opened 13 stores this year with roughly 80 new stores in the pipeline.