Natural Products on line

Whole Foods hit by £10 milion UK losses - August 11, 2008

Last June Whole Foods Market opened its 80,000 sq ft flagship store in Kensington in a blaze of publicity. One year on the company has reported that its UK operations — which also include 5 Fresh & Wild stores — has made pre-tax losses of £9.94 ($18.4) million.

Despite the high losses, Whole Foods ceo John Mackey insists that the company’s UK business is on course to break even by 2011. In the meantime the company is taking action to improve results over the short term — although it hasn’t said what form this will take.

Commenting on the high cost of entry Whole Foods has experienced in the UK, Mackey said: “We initially lost money when we entered into Canada as well; however, our stores there continue to grow and improve? each year and are now very profitable. We believe the long-term growth potential in the UK is much greater than in Canada.? We are carefully evaluating all aspects of our operations in the UK, with the intent to improve our results over the short term and deliver strong returns over the long term.”

Rejecting claims that Whole Foods difficulties were due to high retail prices, Mackey said consumers who shopped “strategically” at the store could do so economically. He added that the phrase ‘whole paypacket’ had been “invented by journalists and perpetuated by journalists”.

As with its Kensington store, Whole Foods latest set of financials have prompted a mixed response. One rival premium multiple retailer told The Grocer this week: “In my view Whole Foods London store should be half the size. This would have intensified the shopping experience and addressed at least part of the waste problem. Large stores rely on shoppers taking away a large basket or trolley of goods by car and its position works against this.” An experienced organic retailer told NP: “ While this is bad PR for the trade, these results say more about poor decision making and pricing policies and lack of local knowledge. It’s not an organic or industry issue.”

But suppliers have spoken up for the US retailer. Yeo Valley’s Ben Cull told The Grocer that working with Whole Foods had been a pleasure, adding that “luck and timing” had worked against the Kensington store in its first year. Salmon and trout supplier Hebridean Smokehouse meanwhile said: “Whole Foods Market is easy to deal with, very professional and treats us fairly in terms of pricing.”

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