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Whole Foods will open a lower-price grocery chain targeting younger shoppers

AP/Lynne Sladky
Whole Foods is trying to shake the nickname “Whole Paycheck.”
By Matt Phillips
Published Last updated This article is more than 2 years old.

It might not be Whole Paycheck much longer.

Whole Foods, the high-priced premium food retailer, is doubling down on its push to cut prices. Recently, it began slashing prices in cities around the US. Now it says it’s developing a new store concept specifically targeting millennials and featuring “value prices.” The stores will begin opening in 2016.

And as a result, Whole Foods’ financials are going to look a lot more like that of a traditional grocery store, complete with the increasingly thin profit margins. In fact, it’s already happening.

Whole Foods’ stock plunged today (May 6) in response to the company’s second-quarter earnings report and its new-store announcement, falling more than 11% in after-market trading today.

And for good reason. Same-store sales were up 3.6% in the second quarter, compared to the same period last year. That’s down from the 4.5% annual growth that Whole Foods posted in its first quarter, so the lower-price strategy isn’t exactly generating gangbusters top-line growth. At the same time the price cuts are pressuring profit margins. And that’s not exactly a healthy recipe for any business.

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