Whole Foods' First Year Under Amazon Didn't Live Up To Expectations

Amazon's path to world domination hasn't moved as quickly through the territory of grocery stores as once expected.

In its fourth-quarter earnings report, Amazon told investors that its revenue from physical in-store sales, including at Whole Foods, Amazon Go and pop-up stores, totaled $4.4B, MarketWatch reports. That is a 3% decline from Q4 2017, which was the first full quarter of Amazon's Whole Foods ownership.

Part of the decline, Amazon Chief Financial Officer Brian Olsavsky told analysts on the call, was due to Whole Foods adding five additional days to its fourth quarter last year to account for a difference in fiscal year end dates before the acquisition. Olsavsky said Whole Foods' in-store revenue grew 6% when compared "apples to apples," though he declined to elaborate and that comparison was not made in the physical report.

Also impacting the physical sales figure was that in-store pickup of products ordered online through Whole Foods' Amazon Prime Now service counted as online sales, rather than in-store sales. Online sales increased 13% year over year in the fourth quarter for Amazon. The company's non-consumer arms, Amazon Web Services and its ad sales, grew at 45% and 95%, respectively, MarketWatch reports.

One factor that could explain Whole Foods' relative stagnation is that the lower prices Amazon promised to bring to the stores has reportedly yet to materialize. Whole Foods CEO John Mackey cited those lower prices when he announced the discontinuation of value-focused offshoot Whole Foods 365 in mid-January.

The news about Whole Foods' sluggish performance helped to cause a 5% dip in Amazon's stock price, according to MarketWatch. Amazon also projects it will increase investment in the next year, partly to fund its Whole Foods expansion and possibly at the cost of dividends.

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