Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

After unsuccessfully trying to stop falling sales for two years, Whole Foods Market has finally found religion. Reinvention will take even longer. 

Shares in Whole Foods are down 43 percent in the last two years
Source: Bloomberg

The organic grocery chain reported another quarter of terrible financial results Wednesday and warned investors its sales would sink even further in 2017 than it previously expected. Still, its shares rose 3 percent Thursday.

Taking Stock
Whole Foods said sales at established stores are not going to recover in 2017
Source: Bloomberg

I'm betting that's because the company finally told investors what they've been waiting more than a year to hear: Whole Foods will give up on a misguided goal of adding 1,200 new stores to an over-retailed America.

Instead, it will close unprofitable stores and hold back on building more of its lower-priced 365 stores until it's more confident in the concept's long-term performance.

It also said it would follow a move made by grocery giant The Kroger Co. over a decade ago, tapping data maven Dunnhumby to overhaul its merchandising and pricing efforts. That has boosted Kroger's profits and helped build customer loyalty. 

I'm not sure what Whole Foods has been waiting for: Back in 2015, I cautioned it didn't have a pricing problem, it had an identity crisis, and that opening more stores wasn't going to help. It's great Whole Foods is coming to its senses now, but these moves will only help it  catch up with competitors, not move past them. 

Whole Foods spread successfully across America because customers were drawn to a healthy food haven with organic fruit and other items they couldn't get anywhere else. Now that Wal-Mart Stores Inc., Kroger and other traditional grocers offer similar items, Whole Foods has turned into just another grocery store. 

And, if Whole Foods is just another grocery store, then it doesn't make sense its shares are so much more expensive than those of its competitors. Whole Foods trades at 22 times forward earnings, compared to multiples of 14.9 and 9.2 at Kroger and Supervalu Inc., respectively. 

Whole Paycheck
Shares of Whole Foods are still trading at higher multiples than other grocery store chains
Source: Bloomberg

The gap is especially glaring now that Whole Foods has admitted it's no longer the growth story it once was.

Whole Foods is smartly going to focus on right-sizing its store footprint, minimizing cannibalization from new stores and improving the return it gets from invested capital, a metric that has suffered in recent years. It's the right strategy for now. 

But until Whole Foods figures out how to re-imagine its business and set itself apart from the pack, investors should look at the company like any other retailer struggling to attract customers in an increasingly tough consumer environment. Until then, Whole Foods doesn't deserve the markup. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Shelly Banjo in New York at

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Mark Gongloff at