Whole Foods Market Inc. is shutting down all three of its commercial kitchens, including one location after the FDA issued a regulatory warning about food safety violations last year.
Based on the reports, some regional kitchens were contaminated with Listeria, which causes food poisoning and is a particularly nasty bacteria. About 48 million cases of food poisoning are caused by Listeria annually in the United States and 3,000 of which are fatal.
As the retail giant prepares to cut costs by centralizing functions and reducing its workforce, employees were formally informed about the decision to outsource their food preparation.
Meanwhile, all teams in Austin, Texas, headquarters remained under pressure for purchasing packaged foods for stores all over the world. In 2015, the company announced plans of laying-off 1,500 jobs at the regional and store levels.
The dual-chief-executive leadership structure of the company was later eliminated, leaving co-founder John Mackey in charge of the struggling chain.
The pioneer in the specialty-grocery sector faces a tight competition as traditional rival stores such as Kroger Co. and Target Corp. have more natural and organic food stocks available at cheaper costs.
It appears that Whole Foods’ 435 stores do not depend on the off-site commercial kitchens for their prepared foods. Most of the stores have built-in kitchens, which Whole Foods said that it would continue its operation.
Whole Foods Market on Heightened Volatility
The retail giant announced its Annual Earnings of $0.28 in the last quarter, in which the Annual Earnings stood at $1.55 last year, based on the filings. Meanwhile, WFM reported a surprise Earnings Per Share (EPS) of 16.67% in the last quarter, with a consensus estimate of $0.4 and an estimated reading of $1.45 for the current fiscal year.
WFM is under pressure with a heightened volatility on Wednesday, which sent share prices to decline. The stock traded at $30.67 at the opening bell, hitting $30.94 on the upside, and settling at $30.9 at the close of trade.
However, 13 analysts claimed that WFM stock is expected to hit $29.69 per share, but it the market becomes volatile, the stock may fall shortly to $23 per share. Hence, analysts gave a higher price estimate of $38.
The chart below illustrates the stock price movement after posting five straight losses, but the stock followed a consolidating move between resistance 31.07 and support 30.67.
Additionally, the RSI hit the 50.2979 level and is currently away from overbought level, which could signal that stock prices could still rally.
As WFM is shutting down all three of its commercial kitchens, there is still no confirmation if stock prices will rally. However, based on its price movement last year during its first scandal, it was seen that share sharply declined and is impossible to recover even if shares have rebounded.
In essence, stock prices could therefore decline.
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