- Whole Foods reported a 1.9% decline in same-store sales for the third quarter ending July 2, according to a company release. This is the eighth straight quarter the natural and organic grocery retailer posted negative same-store sales, though it was less than the 2.8% decline seen last quarter. Company CEO John Mackey noted that same-store sales turned positive over the past three weeks.
- The company, which did not hold a call with analysts in light of its pending $13.7 billion merger with Amazon, listed $3.6 billion in total sales and $106 million in revenue. Both figures beat Wall Street estimates.
- “Our comparable store sales improved sequentially on a one- and two-year basis in the third quarter, and that momentum has accelerated 220 basis points in the fourth quarter, resulting in positive overall comps for the first three weeks,” Mackey said in the release.
Wednesday’s earnings report wasn’t as hotly anticipated as the previous financial results Whole Foods posted this year, for obvious reasons. This is an intermediary period before Amazon assumes ownership of the natural and organic retailer — barring any regulatory curveballs or competing bids, that is — and begins to implement its own measures to improve performance.
Many see the e-commerce giant as the cure to Whole Foods’ woes. To be sure, Amazon will bring significant expertise in logistics, e-commerce and store-relevant technology to bear on Whole Foods operations. A recent study shows that shoppers are anxious to see checkout-free stores and other tech-forward measures. Amazon also has a massive customer base, including more than 80 million Prime members, that it can drive toward Whole Foods’ stores.
Perhaps most importantly, Amazon has very deep pockets that will help it invest in Whole Foods and absorb initial losses as the retailer lowers its notoriously high prices. This is a top priority for the company, according to sources interviewed by Food Dive — and something Whole Foods CEO John Mackey has hinted will happen once Amazon takes over. Amazon's e-commerce business, after all, has been built on convenience and beating competitors on price.
But Whole Foods also needs to operate well as a grocer, and here the company will have to help itself rather than rely on Amazon, which has struggled with its own grocery operations. Amazon can bring a fresh approach to e-commerce and logistical efficiency, among other areas, but Whole Foods is the expert when it comes to in-store merchandising, store operations and the all-important handling of so many fresh products. The grocer isn’t exactly renowned for its efficiency, and it’s lagged mainstream competitors in merchandising, pricing promotions and a store loyalty program in recent years.
Spurred by its poor financial performance and activist investors like Jana Partners, which recently cashed out its 8% stock ownership, Whole Foods has implemented measures aimed at improving its performance. These include increased price promotions, a more centralized buying structure, expanding its customer loyalty program, and deep cost cuts. First announced back in 2015, these steps have been tweaked and expanded over time as they’ve struggled to gain traction, while investors have wondered if and when they will finally gain traction.
This most recent quarter’s financial results, while not stellar, are an improvement over recent quarters and better than analysts estimated. They indicate that Whole Foods is improving its performance, and may be able to combine strong grocery execution with the resources and tech expertise of the country’s leading e-commerce company.