Does Whole Foods Face Systemic FDA Warnings?

Whole Foods Market Inc. (NASDAQ: WFM) is under fire by federal regulators after an inspection conducted back in February. By the looks of this, it could be tough for the giant organic grocer to swallow.

The U.S. Food and Drug Administration (FDA) noted in a letter, dated June 8, that a Whole Foods’ Massachusetts plant, which supplies ready-to-eat products, failed to manufacture, package and store food in a proper manner.

According to the regulators, Whole Foods kept dirty dishes near food, didn’t supply hot water at some hand-washing sinks and allowed high-pressure hoses used for cleaning to spray into areas where foods were being prepared.

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However, the company issued a statement that it had corrected these issues and was “surprised” that the FDA had not reflected its “thorough and tangible steps” in the most recent letter. Although, the FDA did address that Whole Foods’ previous response was inadequate, in consideration that the company failed to describe steps that it would take to improve its food processing operations and compliance in the future.

Ultimately, the FDA cited Whole Foods for failing to keep its equipment in acceptable conditions. The agency noted perhaps one of the largest concerns saying that a sample taken from a machine used to chop vegetables tested positive for a non-pathogenic form of listeria.

The agency further posited that the pathogen’s presence suggests conditions exist in the Whole Foods’ plant that support the growth of dangerous forms of listeria.

Understandably, Whole Foods is lucky to have caught this before consumers suffered. As opposed to only fallout from regulators, consumer law suits and the like could have plagued this company as well. The last thing Whole Foods wants is to end up being the new Chipotle Mexican Grill.

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Shares of Whole Foods closed down 2.9% at $32.52 on Tuesday, with a consensus analyst price target of $30.19 and a 52-week trading range of $28.07 to $41.97. In early trading indications Wednesday, the stock was down an additional 2.6% at $31.66.