Whole Foods Inc. said that it’s sales growth slowed sharply last month after it was revealed that the company was overcharging customers in New York. Whole Foods said Wednesday that sales at established stores rose 1.3% in the three months ending July 5—its weakest growth since 2009 during the economic downturn.
Whole Foods faces competition both from smaller imitators as well as big retailers such as Target and Wal-mart which have begun to stock local and organic foods. The company’s woes were exacerbated in the final weeks of the quarter after New York City officials found the company had mislabeled weights of freshly packaged foods like vegetable platters and chicken tenders, leading to overcharges of under $1 to nearly $15 an item.
Whole Foods co-Chief Executives John Mackey and Walter Robb appeared in a video on July 1 to apologize to customers, saying the mislabeling was an inadvertent error by employees and that it also led to some incorrectly low weights.
Whole Foods’ stock fell 11% to $36.25 in after-hours trading Wednesday, as the company also issued fourth-quarter guidance that fell short of analyst expectations. Its shares are down 19% so far this year. The scandal has only made worse Whole Foods’ reputation as a high-end, extremely overpriced grocer, which ironically was part of the stigma it has been trying to shake for the past few years.