Company initiates cost-cutting measures and re-imaging to face stiffer competition.
Whole Foods Market announced on Wednesday the struggling grocery chain saw a decline in same-store sales for the previous year, the first time since 2009, and the company is making some changes to stop the slide, according to The Wall Street Journal.
And the changes are beginning at the top. Co-founder John Mackey announced the company is eliminating the dual CEO structure, and his co-CEO, Walter Robb, will step down from the position at the end of the year. Robb will remain on the board of directors and will also function as a senior adviser.
The move comes as Whole Foods Market is facing stiff competition from other grocery chains and online ordering services, coupled with a less than enthusiastic customer demand. The company has in recent years cut its prices and started a loyalty program, similar to mainstream supermarkets, as the retailer seeks to change the perception that they are an overpriced chain.
Additional competition comes from more traditional markets who have begun to offer items such as organic and fresh local foods. Mackey said in the announcement, “Competition is everywhere; everybody’s feeling it.”
The firm’s same-store sales dropped 2.5% in fiscal 2016, slightly more that the 2% the company had predicted, marking only the second time ever for such an event. Same-store sales dropped 3.1% in fiscal 2009.
The company said it expects its cost-cutting and streamlining measures to begin to be realized next year, predicting total revenue to rise by 2.5-4.5%, despite sales remaining flat or possibly falling by 2%.
Admitting they have a lot to learn, the company’s executives say they hope the new spin-off, 365 by Whole Foods Market, will strike a chord with younger Americans willing to purchase store branded foods, without the frills and luxuries of a traditional Whole Foods store.
The company also announced their Chief Financial Officer, Glenda Flanagan, would retire at the end of fiscal 2017, after 29 year of service, but will continue as a senior adviser, and also Mary Ellen Coe, vice-president of sales and product operations at Google, has joined the company’s board.