A Whole shebang

Grocery chain to ax 1,500 workers

The hits keep coming against upscale grocer Whole Foods Market.

Reeling from more aggressive rivals and shrinking samestore sales gains, the company said Monday it will lay off 1,500 workers over the next eight weeks.

The Austin, Texasbased operator of 422 stores is under pressure to lower its prices as discounters like Costco, which is poised to become the top seller of organic products this year, shove Whole Foods off its comfortable perch .

Also, the chain was stung this summer by a slew of negative publicity after it was caught by a New York City regulator overcharging consumers on packaged goods at stores in the Big Apple .

“By any measure, the audit had a significant impact on our sales,” said Walter Robb, coCEO of Whole Foods, during an earnings call in July. “Trust was broken and has to be rebuilt.”

Meanwhile, samestore sales in the quarter ended July 5 grew by 1.3 percent — down from the 3.9 percent gain in the same period a

year ago. Over the past 18 months, it has been quietly lowering prices for meats, seafood and produce, which can be as much as 35 percent higher than rivals, said Edward Jones analyst Brian Yarbrough.

“The only way to offset the hit to profit margins from lower prices is to cut costs,” Yarbrough added.

Most of the cuts will come at the store level, where 30 percent of the staff works part time, say industry experts. Whole Foods has a low annual turnover rate of about 20 percent, which amounts to about one worker per store per week, said supermarket consultant Burt Flickinger.

The company is offering “generous severance,” according to Robb, and workers may be placed in other stores as the company has more than 100 stores in development.

If the cuts come at the expense of service, “It could be a downward spiral for the company,” Yarbrough warned.

Whole Food shares, down 39 percent this year, fell 1.1 percent, to $30.75, on Monday.