Whole Foods needs to refocus as 1Q earnings drop

High-end organic grocer Whole Foods must begin to operationally change its cost structure in order to survive the economic recession. Sales have taken a hit as cost-conscious shoppers moved away from the higher priced foods and traded down. As a result, the value of the company's shares have fallen almost 75% in the past year.

However, upper management has made a conscious effort to cut costs this summer and decrease capital spending, as well as make in-store changes to help manage the company through the difficult economy. Whole Foods will have to adjust to lower sales volumes and continue to improve its balance sheet. Challenges came in stores in areas with high foreclosure and unemployment rates, forcing the retailer to begin offering lower-priced products, private-label lines, coupons, and other value-related marketing to attract customers.

Analysts project that despite the economic climate, Whole Foods can generate long-term growth due to their wise investments in infrastructure. However, future expansion plans have been scaled down and new stores planned for the United Kingdom will be put on hold.

I am confident retailers like Whole Foods can survive the economic downturn and hopefully remain true to their core values and provide customers with a variety of all natural and organic food. As the fastest growing food segment in the US, all-natural/organic products can not only help the health of this nation but stimulate the economy as a growing, innovative industry.

From Forbes.com