Amazon’s Whole Foods to cut hundreds of jobs

Amazon-owned Whole Foods says it is cutting several hundred jobs as part of a process to simplify the grocery chain’s operations. The company plans to make changes to some regional and global support teams over the next two months, according to a memo sent to employees Thursday by the Whole Foods executive team.

The layoffs will take place as part of that shift and will affect less than 0.5% of the company’s total workforce, a Whole Foods spokesperson confirmed.

Under the changes, Whole Foods, which operates across nine regions, will shift to six. Among other things, it will also create a companywide operations team and transition some specific store support services from regions to a single team.

“We often talk about how simplifying our work and improving how we operate is critical as we grow,” the company’s executive team wrote in the memo. “We’ve made great progress in these areas through previous operational and organizational changes. As the grocery industry continues to rapidly evolve, and as we - like all retailers - have navigated challenges like the COVID-19 pandemic and continued economic uncertainty, it has become clear that we need to continue to build on these changes.”

Whole Foods said it will not eliminate any store or distribution roles, and the changes won’t result in any store closures.

Amazon bought Whole Foods in 2017 for $13.7 billion as part of a wider effort to expand its groceries business. But those effort have been rocky.

In February, the company said it planned to close some Amazon Fresh supermarkets and Go convenience store as part of a periodic assessment of its grocery portfolio. In a letter to shareholders last week, Amazon CEO Andy Jassy said “Whole Foods is on an encouraging path, but to have a larger impact on physical grocery” the company “must find a mass grocery format that we believe is worth expanding broadly.

Separately, Amazon’s stock rallied to its highest in more than two months on Friday after a research firm predicted the online heavyweight’s retail business in North America is set to beat Wall Street’s estimates.

Amazon’s shares climbed 4% to $108, their highest since Feb. 3, giving the Seattle company a stock market value of $1.1 trillion.

Data compiled by YipitData suggests Amazon’s March-quarter North American net sales will beat analysts’ expectations, and that April sales are also trending ahead of Wall Street’s consensus for the second quarter, the research firm told Reuters in an email.

North American net sales account for more than half of Amazon’s overall revenues, with international and Amazon Web Services, or AWS, making up the rest.

With Amazon set to report its first-quarter results on Thursday next week, analysts on average see the company’s North American net sales climbing 8.5% year over year to $75.2 billion, according to Refinitiv data.

New York-based YipitData aggregates and analyzes data that track the behavior of millions of U.S. consumers, including email receipts, online transactions, app data and web traffic.

JPMorgan analyst Dough Anmuth wrote in a research note on Friday that e-commerce trends were likely “muted” in the first quarter as economic uncertainty impacted consumer spending.

But Anmuth said he expects e-commerce to make more gains over traditional retailers, penetrating further into groceries, appliances and other categories. He maintained Amazon’s stock as “our Best Idea”.

Also on Thursday, Amazon defeated a private lawsuit in Seattle federal court that accused it of a scheme to curb competition for shipping and fulfillment services, causing consumers to pay more for purchases in violation of U.S. antitrust law.

With Friday’s gains, Amazon has recovered more than 30% from its closing low in December. It remains down 42% from its record high close in July 2021.

Meanwhile, Amazon plans to expand its business selling office supplies in Europe and internationally after the pandemic helped boost sales as companies shopped more online and looked for bulk discounts.

The company is looking for high growth, high margin businesses to pursue as it plans to close all 68 of its physical book stores, pop up shops and “4-star” stores in the United States and United Kingdom, ending some of its longest-running experiments in brick-and-mortar retail.

Amazon Business’ gross sales in Europe grew at a compound annual rate of 25% from 2020 to 2022, vice president Alexandre Gagnon said in an interview.