WHOLE FOODS CLOSURES COULD SLOW CANADIAN GROWTH.

CANADIAN EXPANSION PLANS MAY BE ON HOLD

• Poor results in the U.S. will likely weigh further on Whole Foods Market Inc.’ s once- ambitious plans for Canada, which appeared to hit a wall last month after the boutique grocery chain cancelled two planned store openings in Alberta.

Austin, Tex.-based Whole Foods operates 12 of its 469 stores in this country, and had planned to open as many as 37 more locations, a strategy outlined by chief executive John Mackey during a visit to Montreal three years ago.

But as such, Whole Foods has not ventured beyond B.C. and Ontario. Now, after Whole Foods reported its sixth consecutive quarter of falling same- store sales late Wednesday and announced it would close nine U. S. stores, industry watchers say the company might be scaling back on its earlier plans for this country.

It comes as the core of Whole Foods’ business — a wide selection of organic and healthier food, rounded out by a robust business in readymade meals such as gourmet pizza and fresh- squeezed juices — has been mimicked by conventional U.S. grocery chains.

“The more conventional mainstream supermarkets have upped their game,” Mackey told investors on a conference call to discuss first- quarter results. After a prolonged period of being “really preoccupied with Walmart” and trying to compete with the discount behemoth, the chains began to look in a different, higher- end direction, Mackey said. “They began to pick up more of our products. They began to study ( Whole Foods) in a more systematic fashion, particularly as they began to see their customers begin to migrate over to doing more and more shopping with Whole Foods Market.”

It’s a phenomenon that has happened in Canada, too. After Loblaw spent years trying to compete with Walmart a decade ago by opening superstores for food and general merchandise, the country’s largest grocery chain has redoubled its efforts in recent years to improve its food assortment in its full- line and urban stores, while still steadily growing its discount division, No Frills. Its first “Great Food” store opened in 2011 inside Toronto’s Maple Leaf Gardens, and features a higher- end food assortment including expensive cheeses, a sushi bar, artisanal bakery and a large section for finer takeout prepared foods that has since become a template for Loblaw’s urban locations across Canada. Metro has also reaped financial benefits from improving its assortment of fresh and prepared food items, and while both chains have added more fresh food and ethnic items to the mix.

Meanwhile, Whole Foods’ weakness on its home turf has led the retailer to scale back on its original vision for the U. S. “We will continue to grow, but no longer have a goal of 1,200- plus stores,” Mackey said, adding the retailer would use a more “disciplined” growth strategy that looks to improve samestore sales, earnings and free cash flow.

Whole Foods gave no ex- planation last month when it said it was scrapping stores it had planned to open in Edmonton and Calgary, though the market downturn in western Canadian and sluggish retail sales likely factored into the decision. At the time, the company confirmed it would go ahead with two planned 2017 store openings in North Vancouver and Toronto.

Reached Thursday, company spokeswoman Betsy Harden did not outline Whole Foods’ specific plans for Canada, but referred to Mackey’s comments on the investor call about the company’s continued growth.

“We have a number of stores still in the pipeline and we will continue to grow,” Harden said in an email.

Whole Foods s aid its same-store sales in the quarter ended Jan. 15 fell 2.4 per cent, and warned same-store sales could fall as much as 2.5 per cent in fiscal 2017. The retailer cut its forecast to US$ 1.33 in per share earnings for this fiscal year from an earlier projection of US$ 1.42, and predicted a sales increase of at least 1.5 per cent, lowered from its past prediction of a 2.5 per cent to 4.5 per cent sales climb.