In a company statement , upscale, natural and organic grocer Whole Foods Market ( WFM ) announced that it would be cutting roughly 1,500 jobs over the next eight weeks; this equates to about 1.6% of its total workforce. The reasoning behind the workforce reduction is an "ongoing commitment to lower prices for its customers and [an investment] in technology upgrades while improving its cost structure."
Whole Foods expects a large portion of its newly unemployed staff will find other positions within the company; there are currently 2,000 open positions as well as new jobs that are part of the over 100 store locations in development.
"This is a very difficult decision, and we are committed to treating affected Team Members in a caring and respectful manner. We have offered them several options including transition pay, a generous severance, or the opportunity to apply for other jobs. In addition, we will pay these Team Members in full over the next eight weeks as they decide which option to choose." said Walter Robb, co-CEO of Whole Foods Market. "We believe this is an important step to evolve Whole Foods Market in a rapidly changing marketplace."
Despite adding 9,000 new jobs over the past year and 35,000 jobs over the past five years, Whole Foods' business performance has been disappointing. Its stock has decreased more than 40% over the past six months due to many poor quarterly results. In the third quarter of fiscal 2015, its reported earnings and comparable store sales both fell below Wall Street estimates, which led to a lower-than-expected fourth quarter earnings forecast.
This bleak outlook could be due to increased competition from mainstream retailers like Kroger ( KG ) and Wal-Mart ( WMT ) in the natural and organic food business, as well as hefty allegations that the company is overcharging for pre-packaged goods in some New York City locations.
Currently, Whole Foods has fallen a slight $0.07, or 0.23%, since Monday's market opening. Its stock rests at $31.03. The company holds a #4 (Sell) ranking on the Zacks Rank.
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