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Whole Foods makes £36m loss in Britain

The British arm of Whole Foods Market made a £35.9m loss last year, laying bare the scale of the challenge it faces to establish itself on these shores.

The US natural and organic food retailer opened its UK flagship on London's trendy High Street Kensington to a fanfare in June 2007 to take on Marks & Spencer and Waitrose, but it is yet to open another store. The 80,000 sq ft flagship has struggled to compete against established UK grocers, and has, at times, suffered from woeful customer traffic, as well as customers trading down and away from pricier organic food during the recession.

Its UK subsidiary Fresh & Wild made a pre-tax loss of £35.9m for the year to 28 September 2008 – hit by an impairment charge on several stores and related administrative support assets, according to accounts filed at Companies House last week. In a statement, Whole Foods said: "The £27.1m impairment charge is simply an accounting measure that does not accurately reflect the progress the company has started to see in the UK."

In addition to its flagship High Street Kensington store, the grocer has rebranded the last four remaining Fresh & Wild stores – the chain it acquired in 2004 – to the Whole Foods Market brand. Sources said Whole Foods was "very close" to opening another store in the UK, although it is unclear where it will open in the capital.

Whole Foods said it had taken "significant" steps over the past year to "ensure its long-term future" in the UK, including closing its Bristol store in September. It has also parachuted in senior executives from the US to the UK, notably Jeff Turnas, a company veteran of 15 years, as regional president, as well as David Doctorow, its newly appointed vice president in the UK, who has 27 years experience.

Mr Turnas said yesterday: "Whole Foods Market has been making changes and improvements to the Kensington store, and we have been pleased with the positive reactions we have been receiving from our customers. We plan to continue to make these types of changes at our UK stores as well as continue to aggressively look for additional store sites in London."