Whole Foods (NASDAQ: WFMI) was one of the great retail growth stories of the last five years. From mid-2003 to early 2006, the company's shares rose $25 to $77. After a couple of tough years, the stock is back under $20.

Whole Food's most recent quarterly results were abysmal, adding to the perception that the best days for the health food chain are over.

WFMI's net income dropped to $39 million from $49 million in the same quarter a year ago. The company also suspended its dividend and cut capital spending for non-store activities by $50 million.

According to the AP, "The natural foods grocer said it now expects sales growth of 6 percent to 10 percent for the year - rather than the previously stated 25 percent to 30 percent growth. And the company said its comparable-store sales are expected to grow 1 percent to 5 percent, down from the previously anticipated 7.5 percent to 9.5 percent growth."

Not unlike Starbucks (NASDAQ: SBUX), Whole Foods is caught in a downturn it cannot arrest. Larger food chains looked at the WFMI success and decided to open natural food sections of their own. Whole Foods charges a premium for its products and, in a slow economy, consumers are less likely to accept that.

The recession will end, but competition from larger food retailers will not. Whole Foods may have to drop its prices permanently. That means its old margins are never coming back.

Douglas A. McIntyre is an editor at 247wallst.com.