A new survey of more than 1,000 Whole Foods customers hints at troubled times ahead for the supermarket giant. Seven out of ten Whole Foods shoppers told Kelly Bania, an analyst at BMO Capital Markets, "that they had not noticed any changes in prices in Whole Foods over the past three months," CNN Money reported. Not good for a company that has made recent, considerable efforts to slash costs and lower prices.
Worse, the survey results imply that the vast majority of Whole Foods customers no longer perceive the company as the leader in the quality, organic food category. Bania downgraded her outlook for Whole Foods after the results were published. The company's stock is now close to its 52-week low.
For observers of what has seemed like a perfect storm of PR debacles for Whole Foods, Wall Street's purported directive to dump the company's stock is not much of a surprise. Whole Foods has not only faced stiffer competition from Walmart, Costco, Kroger, and organic adversary Trader Joe's of late, but a barrage of bad publicity too. There was the federal lawsuit for alleged securities violations; an overcharging scandal that ended in a $500,000 settlement; a string of food recalls; and, perhaps worst of all, the insanity that was asparagus water.
The fact that a majority of customers may no longer trust the brand to deliver on its core promises is a blow that Whole Foods may not easily recover from. Some analysts, like Deutsche Bank's Karen Short and Shane Higgins, have hinted that more dramatic measures, such as new corporate blood, or even a leveraged buyout, could be what the company needs. Indeed, an alleged takeover by private equity firms Cerberus and 3G Capital was a hot rumor this past December. When asked to comment on Bania's research and Wall Street's apparent disillusionment with the company, a Whole Foods rep wrote: "We’re in the quiet period, and as a rule don’t comment on these types of surveys. We will report earnings on Feb 10." Until then, it's impossible to know how poorly Whole Foods has been doing in the past quarter, though if the stock price is any indication, the country's leading organic and natural foods-focused grocer has some 'splaining to do to its shareholders.