Kelly Bania, an analyst with BMO Capital Markets, New York, said she questioned whether the new format might cannibalize existing stores, increase price competition in the natural and organic segment or impact Whole Foods’ growth outlook.
According to Scott Mushkin, an analyst with Wolfe Research, New York, “The company is feeling pressure from lower-priced competition, the impact of cannibalization, as well as generally lower performance of new stores. The appropriate strategy under the circumstances is to realign the corporate structure so that Whole Foods can price more effectively and slow store growth.
“The management team has chosen a different path — one defined by more measured price investments, robust new-store growth and the development of a new value format. These decisions will ultimately place further pressure on financial performance.”