Whole Foods to name new 'streamlined' chain 365

Whole Foods Market said Thursday its new chain of lower-priced stores will be called "365 by Whole Foods Market," extending the private label brand already used in the stores.

While releasing second-quarter earnings last month, Whole Foods announced a plan to shed its reputation as a seller of fresh but expensive foods by opening new stores that will stock lower-priced items for younger customers. The new stores will open next year.

With the nickname "Whole Paycheck," the Austin-based company has carried a reputation of being a store that is not easily accessible for budget-minded customers. With demand for organic, fresh and locally sourced ingredients growing, mainstream grocery retailers have been encroaching the market established by Whole Foods by offering competitive prices.

Specialty grocery stores that are reputed to be cheaper, like Trader Joe's, also have proven to be formidable competitors. And big-box retailers Walmart and Target have enlarged their grocery shelves and opened smaller stores in urban centers to broaden their consumer base.

Second-quarter sales at Whole Foods stores open at least a year rose 3.6%, but that was below analyst expectations for an increase of 5.3%. Total sales increased 10% to $3.65 billion, short of analysts' target of $3.71 billion.

Co-CEO Walter Robb said in May the new stores will have "modern, streamlined design, innovative technology and a curated selection." And while they'll be aimed at younger customers, Robb said the stores will appeal "to anyone looking for high-quality fresh food at great prices."

Jeff Turnas, a 20-year Whole Foods veteran who oversaw its U.K. operation, will be president of 365.

"We are now excited for the next evolution to extend our offerings to a broader audience," Turnas said in a statement Thursday.

Whole Foods has used the 365 Everyday Value brand to market items that are meant to "fill your pantry without emptying your pocketbook," its website says.

Contributing: Hadley Malcolm