One number that should terrify Whole Foods investors

Whole Foods investors should be worried.

The company reported second-quarter earnings on Wednesday that were a mixed bag.

Earnings per share beat analyst expectations, but sales at stores open at least a year fell 3% - a larger drop than Wall street had forecast.

Total sales increased by 1.3% to $3.7 billion, however that's "a very meager outcome" considering the company has opened 16 new stores so far this year, according to Carter Harrison, analyst for retail consulting firm Conlumino.

Investors don't seem bothered though. Whole Foods shares rose more than 2% in early trading on Thursday.

Watch this number

But there is one number that should concern investors more than any other: the 2.1% drop in transactions.

Transactions are a direct measure of foot traffic, and while declines in same-store sales can be attributed in part to price cuts, there's little to explain a drop in traffic other than a loss of customers.

The 2.1% drop in transactions in the second quarter comes after a 1.6% drop in the first quarter and 0.8% decline in the fourth quarter of 2015.

The trend is a clear indication that Whole Foods is losing customers.

The primary reason that Whole Foods is losing customers is because it's prices are still too high relative to its competitors, according to analysts.

"As superior as Whole Foods is for fresh and wholesome foods, it remains eye-wateringly expensive," Harrison wrote in a recent note to clients. "Such price premiums are justified on unique and specialty items; however, on everyday items sold elsewhere there is no justification for the inflated prices Whole Foods charge - and consumers increasingly resent paying over the odds."

Whole Foods has promised to increase promotions and cut prices in an effort to shed its "Whole Paycheck" image. But the company's efforts have so far been ineffective.

"The whole purpose of reducing prices should be to attract and keep more customers, with a consequent uplift to the sales line," Harrison wrote. "However, at present this dynamic is not working as effectively as it should."