Why the Whole Foods Stock Is Getting Crushed
Unlike its organic produce, Whole Foods' stock has gone bad. Since January, the grocer's stock has dropped by nearly 40%—wiping out almost $7B in market value—making it one of the worst performers in 2015.
The poor results are spurred by brutal competition from cheaper grocers like Walmart and Kroger increasing organic offerings at lower prices. In turn, Whole Foods tried lowering prices, which only put dents into profit margins.
Speaking of prices, Whole Foods is still reeling from its "systematically overcharging" scandal back in June. Same-store sales fell that July, right after the bad publicity.
"The impact was really felt across the whole country, not [just] in New York City. This was national news," Whole Foods CFO Glenda Flanagan said in a conference call.
Analysts are forecasting a slight decline in profits from 2014 and same-store sales growth of 0.7%. To rub salt in the wound, Whole Foods also recently announced it was laying off 1,500 employees. [CNN]
