Whole Foods IDs Locations for Value Format

Whole Foods Market has pinpointed the Silver Lake neighborhood of Los Angeles as the site of its first value-oriented 365 by Whole Foods Market brand while also disclosing lease locations for another five stores set to open in the second half of 2016. It also plans to double the number of 365 by Whole Foods Market store openings in 2017.

Having renegotiated the lease in development for the Silver Lake location, which will be converted from a traditional Whole Foods Market to a 365 format store, the company said the move will enable it to open more quickly in the new neighborhood in L.A. – where it already has 24 existing namesake stores – to capitalizing on the operational efficiencies and an available staffing base.

Aside from Silver Lake, the Austin-based grocery chain has signed leases for 365 by Whole Foods Market locations in Bellevue, Washington; Houston; Portland, Oregon; and Santa Monica, Calif.

“We are really excited about the progress we have made with securing real estate in markets where there is high demand for both quality food and value in a convenient format,” said Jeff Turnas, president of 365 by Whole Foods Market. “We think the Silver Lake area of Los Angeles is an ideal community to plant our first 365 store flag and bring a modern shopping experience that draws from the best innovations of Whole Foods Market stores and gives them a new expression. With a fresh format and unique product assortment, we think 365 will offer convenience and value while providing the quality standards and transparency that consumers love and expect.”

Designed to complement its flagship Whole Foods Market brand with fresh, healthy foods that will appeal to a broader audience with a streamlined, quality-meets-value shopping experience, 365 by Whole Foods Market stores will feature a curated mix of products that adhere to the company’s industry-leading quality standards in an environment that’s fun and convenient for shoppers, according to a statement.

In other Whole Foods Market news, the retailer's shares fell 10 percent on Wednesday after  missing its fiscal Q3 earnings target alongside a projected weak outlook, attributable in large part to bad publicity over being accused of overcharging customers in New York City.

The chain said sales growth slowed sharply in the last two weeks of the 12-week quarter ending July 5, in the immediate wake of the firestorm of bad press from an audit report filed by New York City officials that found Whole Foods overcharging customers by overstating the weight of pre-packaged products.

"There's no magic bullet for restoring whatever trust was lost," co-CEO Walter Robb said during a call with analysts and investors, while noting the company has taken measures to ensure the overcharging doesn't happen again, such as better training for workers and an offer to customers that products will be free if the prices are not accurate and not in their favor.

For the second quarter, total sales increased 8 percent to a record $3.6 billion while same store sales increased 1.3 percent. The company returned $47 million in quarterly dividends to shareholders and repurchased $98 million of common stock, or 2.1 million shares while ending the quarter with total and restricted cash and investments of approximately $1 billion.

"In the third quarter, our sales increased 8 percent to a record $3.6 billion translating to healthy EBITDA margin and return on invested capital," said Robb. "A strong balance sheet and cash flow of $1 billion year to date have enabled us to self-fund our new store development and strategic growth initiatives while returning over $325 million to our shareholders through dividends and share repurchases."

Robb continued: "In this rapidly changing marketplace, we believe we are taking the necessary steps to position ourselves for the longer term. We remain focused on innovating and evolving to best serve our customers' diverse purchasing preferences. From the unique experience of our Whole Foods Market stores, to our growing online channel for home delivery, to the exciting launch of our 365 by Whole Foods Market stores, we are making investments to extend our reach to both new and existing customers."