Whole Foods has more bad news for the Pac NW

When we last looked in on industry giant Whole Foods, the chain was using its restraint-of-trade battle with the FTC as an unlikely opportunity to pressure the 9-store chain of Portland-based New Seasons markets into opening its confidential business information to them.

Today, Seattle blog Slog reports that Whole Foods is handing another piece of nasty news to the Pacific Northwest:

Blaming a tough economy, Whole Foods executives sent an ominous letter to all employees in its Pacific Northwest stores last month that warns of potential layoffs, announces a hiring freeze, and says new stores are on hold.

"Many teams are clearly overstaffed for their current sales and are at the point where labor needs to be reduced…" the memo says. It adds that as “sales soften,” the company has accumulated $59,000 in labor deficits. "Team sales and labor will be reviewed in January and tough decisions may be made if we are unable to achieve sales to labor balance by that time." The memo says no layoffs will occur before January.

The preliminary spadework I've done hasn't overturned any direct connection between the natural food empire's FTC problems and this story other than the obvious --certainly the nasty economy and drying up commercial credit could probably explain it on its own.

A WF spokesperson says the Pac NW hasn't been particularly singled out:

According to several sources, the largest local Whole Foods store at 56,000 square feet, located in Bellevue, has been lacking for sufficient business. Meanwhile, as Jonah reported, the company delayed plans for a store in Interbay and announced plans to downsize it.

In fact, the Texas-based chain plans to only build smaller stores from now on.

"We are looking at sites that are under 40,000 square feet as a format for our stores as we go forward," says Vicki Foley, a Whole Foods regional spokeswoman. "That is not just our region—that’s for the whole county." While 40,000 square feet is still large, it marks a departure from competing with the Safeway and QFC mega-markets.

But the size of the stores may be a secondary explanation for the slump in sales in poor times. Whole Foods is notoriously expensive, earning the nickname "Whole Paycheck."

Any Whole Foods people out there who can share that letter from corporate HQ?

(Crossposted at Loaded Orygun. Hat tip to AmericaBlog.)