A Whole Foods Market
Courtesy of Whole Foods
By Phil Wahba
November 4, 2015

Looks like Costco (COST), Kroger (KR), and even Walmart (WMT) have elbowed their way into Whole Foods’(WFM) business.

Whole Foods stunned investors on Wednesday when it announced that comparable sales, a gauge that strips out the effects of new stores, fell 0.2% in the quarter ended Sept. 27. It was the first time such sales declined since 2009, and the third quarterly drop at Whole Foods since 2000. The company’s sales were down by more than 6% after hours on Wednesday, after it became clear no relief was on the way for a while: Whole Foods said comparable sales were down 2.1% so far this quarter.

A recent note from Wolfe Research said that Whole Foods “is under assault from the better supermarkets, small organic and value-oriented retailers, as well as Costco.”

What’s more, Whole Foods is feeling pinched by Walmart’s grocery push and Amazon.com’s (AMZN) growing Fresh grocery delivery program. The company is also having trouble competing on price in a more competitive environment. And it will soon have to contend with a new grocery offering from Target.

The grocer was also hurt last summer by findings from a New York consumer affairs agency that it was overpricing some products. In July, executives said coverage of that probe had a negative effect on its earnings.

Whole Foods is trying to counter those challenges: among other things, it is planning to open a chain of lower-priced stores called “365.” Still, the company is hobbled by something that it can’t fix that quickly: older stores. The following graphic from the company’s current sales release makes it all too clear that its older stores are presenting a major sales challenge.

Nearly three quarters of Whole Foods stores are older than five years. Such locations posted mediocre comparable sales growth last year. And with only 38 new stores on the horizon this year, it looks like investors may have to brace themselves for more trouble at the one-time Wall Street superstar.

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