Whole Foods Market Inc. (NASDAQ: WFM) shook up the markets Monday morning when it announced via an SEC filing that the company would be cutting 1,500 jobs within the next two months. In what some might be calling a bear market, this organic grocer is making the cuts to save on the bottom line. But is this enough?
Source: courtesy of Whole Foods Market
Some investors want more from companies, specifically solid revenue growth. So saving on the bottom line might not make the cut for investors, or really have the desired effect that the company wants.
It is worth pointing out that shares of Whole Foods are hovering just above a four-year low as this all is taking place.
Whole Foods said in a Securities and Exchange Commission filing:
As part of its ongoing commitment to lower prices for its customers and invest in technology upgrades while improving its cost structure, Whole Foods Market will reduce a number of positions over the next eight weeks. The company estimates the net reduction to be approximately 1,500 jobs, which represents 1.6 percent of its workforce. It anticipates many of the reductions to be managed through natural attrition and expects a significant percentage of affected Team Members will find other jobs from the nearly 2,000 open positions across the company or via new jobs created from the more than 100 new stores in development.
Whole Foods Market added over 9,000 new jobs in the past year and created nearly 35,000 over the past five years.
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Walter Robb, co-CEO of Whole Foods, added:
This is a very difficult decision, and we are committed to treating affected Team Members in a caring and respectful manner. We have offered them several options including transition pay, a generous severance, or the opportunity to apply for other jobs. In addition, we will pay these Team Members in full over the next eight weeks as they decide which option to choose. We believe this is an important step to evolve Whole Foods Market in a rapidly changing marketplace.
Shares of Whole Foods dropped 1.1% to $30.75 Monday morning. The stock has a consensus analyst price target of $38.68 and a 52-week trading range of $30.18 to $57.57.
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