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Whole Foods' Sales in a Slump Following Overcharging Scandal

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The NYC-area scandal seems to be having widespread effects.

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Previously shady practices are coming back to haunt bourgeois grocer Whole Foods Market: Inc. reports the chain is feeling the effects of last month's scandalous news that NYC-area stores were making a habit of overcharging customers. Whole Foods said yesterday that "sales growth slowed sharply at established locations in the last two weeks of the quarter ending July 5."

Devotees of the already-pricey store were understandably put off when it was revealed that its NYC stores were mislabeling weights on packaged foods, overcharging at scanning stations, and sometimes taxing items that should have been tax-free — and it had been going on since 2010. Co-CEO John Mackey apparently doesn't feel like all the negative backlash was deserved: "We're not sure why Whole Foods was singled out for this attention, and we don't know why the media ran wild with this," Inc quotes him as saying on an investor call.

Nonetheless, the retailer is now "taking steps to prevent overcharging going forward," including "training for workers and a pledge to give away products if customers discover they were overcharged."

Scandals aside, the chain is already facing some stiff competition: Costco recently surpassed it to become America's biggest organic grocer. Whole Foods is striving to diversify its customer base, though, planning a new chain of more affordable stores called 365 by Whole Foods Market.

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