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Whole Foods plans a major marketing push

Published July 30, 2014 9:23 pm

Grocers • Company launching first national marketing campaign, expanding home delivery.
This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Whole Foods is getting ready to launch its first national marketing campaign and expand home delivery as it looks to fend off bigger players muscling into the organic and natural foods category.

Based in Austin, Texas, the company said this fall's marketing campaign will explain to customers what makes it different and why it's better than other supermarkets.

"We believe there are real and substantive differences in the company and in the values and the foods that we sell," said Walter Robb, co-CEO of Whole Foods, during a conference call with investors.

In addition, he said the company is partnering with third parties to offer home delivery in 12 to 15 major markets, with plans for a wider rollout over time. Whole Foods declined to give details about which cities will get home delivery, but the company already offers delivery in select major markets, including New York City. And other major players such as Wal-Mart are testing delivery as well.

In coming weeks, Whole Foods also said it will test a new loyalty program, with plans to roll it out widely in time for the winter holidays next year.

The efforts come as Whole Foods struggles to spark slowing sales growth, which has worried investors that the company is losing ground in the organic and natural foods segment it once dominated. On Wednesday, Whole Foods sales at established locations rose 3.9 percent in its latest quarter, helped by a shift of the timing of Easter.

A year ago, the figure had climbed 7.5 percent.

The problem is that Whole Foods is contending with traditional retailers such as Wal-Mart Stores Inc. and Kroger Co. and even drug stores, which have significantly expanded their organic and natural food offerings.

To appeal to a wider range of customers, the company is trying to change its pricey image that has led to it being dubbed "Whole Paycheck" by some. The effort to keep prices down has included pushing its store brands, which are generally cheaper to stock than name brands.

Looking ahead, Whole Foods now expects sales at established locations to rise 4.1 to 4.4 percent for the year, down from its previous forecast of 5 to 5.5 percent. It also trimmed the high-end of its earnings per share forecast by two cents, and now says it expects to earn $1.52 to $1.54 per share.

For the quarter, the company said it earned $151 million, or 41 cents per share, which is two cents more than Wall Street expected.

A year ago, it earned $142 million, or 38 cents per share.

Revenue rose 10 percent to $3.38 billion, but missed Wall Street forecasts for $3.4 billion, according to Zacks.

Shares of Whole Foods fell 5.4 percent to $36.99. The stock is down more than 32 percent over the past year. —

Earnings

Whole Foods reported quarterly sales that fell shy of Wall Street expectations and lowered its outlook for the year, raising worries about the intensifying competition the organic and natural products grocer is facing.

For the quarter, Whole Foods said sales at established locations rose 3.9 percent. That's a slowdown from the 7.5 percent increase it saw a year ago. The company now expects the figure to rise 4.1 to 4.4 percent for the year, down from previous forecast sof 5 to 5.5 percent.

For the quarter, the company said it earned $151 million, or 41 cents per share, which is two cents more than Wall Street expected. A year ago, it earned $142 million, or 38 cents per share. Revenue rose 10 percent to $3.38 billion, but missed Wall Street forecasts for $3.4 billion, according to Zacks.

Shares of Whole Foods fell 5.4 percent to $36.99.