Whole Foods has a 'high class' problem that's leading to 'entirely empty' shelves

Barclays analysts visited Whole Foods stores and found "entirely empty" shelves, displays, and hot food bars and produce that "appeared to have deteriorated."
The problem could be indicative of higher shopper traffic at Whole Foods but also lost sales.
"This is a high class problem if in fact sales have really accelerated — but is also an execution issue resulting in lost sales," analysts said.

Some Whole Foods stores are in disarray with "entirely empty" shelves and deteriorating produce, according to recent store checks by Barclays analysts.

In a research note published Tuesday, analysts said they encountered "high" out-of-stock issues last week in every department of one Midwest store across both private-label items and branded items.

At another store located on the East Coast, which was hit with a winter storm earlier in the week, inventory problems were "extraordinary," analysts said.

"The store had no bananas and the supply of eggs and Tropicana products was very low," the Barclays analysts wrote. "Entire displays, refrigerated cases, and end caps were completely empty. The prepared foods hot bar was entirely empty."

"Admittedly, a winter storm had just impacted the region but we were surprised out-of-stocks were at such levels," the analysts added. Whole Foods did not immediately respond to a request for comment.

The out-of-stock issues could be a positive sign for Whole Foods, indicating higher shopper traffic. But the issues are also indicative of lost sales.

"This is a high class problem if in fact sales have really accelerated — but is also an execution issue resulting in lost sales," analysts said.

The analysts also noted that the size and quality of produce at Whole Foods "appears to have deteriorated."

"It is possible this is weather-related but our observations also coincide with several reports that customers felt quality of produce had started to deteriorate," the analysts said, citing a Business Insider report.

Customers claim out-of-stock issues are rampant

Some customers and Whole Foods employees have claimed that out-of-stock issues at Whole Foods are rampant.

One employee of a Texas Whole Foods store told Business Insider that out-of-stock issues were "horrible" over the holidays and that the produce department "looked embarrassing." The employee asked to remain anonymous for fear of losing his job.

A long-time Whole Foods customer, Richard Reisman, said the Whole Foods where he shopped in New York City had been having severe inventory problems.

On a recent visit, two out of the three staples on his shopping list were out of stock, and "the entire frozen fruit area was more than half empty," he said. He also said it was hard to find a shopping cart.

"This is a serious case study in management failure," he told Business Insider.

If you work for Whole Foods and have a story to share, reach out to this reporter at hpeterson@businessinsdier.com.