When was the last time you heard a company executive say something like, “We sell a lot of junk.”? Of course, in this case, Whole Foods’ (WFMI) CEO John Mackey was not referring to the quality of their products, but rather the nutritional value of some of their food. Mackey is alluding to a new initiative that his premium grocery stores will likely undertake over the coming months in order to reinvigorate shopper loyalty. The emphasis will be on providing a place to shop for healthy groceries, in addition to employees ready to give nutrition advice and cooking classes. In the past, Whole Foods has been known for providing organic and gourmet foods, but that does not necessarily equate to healthy. The buzz over organic that sparked WFMI’s growth has largely died off since the recession hit because of the higher prices of organic fare.

Mackey discussed his grand vision in an interview with The Wall Street Journal today.

WSJ: Where did the idea to turn Whole Foods back into a health food store come from? Is it because there’s a lot more competition in the gourmet area these days?

Mr. Mackey: “One way to think about Whole Foods is that we’ve always had two philosophies that sort of wrestle for our own soul and for the souls of our customers. One is the foodie philosophy, that food is primarily about indulgence, about pleasure. The other part is that food is primarily to nourish us, to make us vital. Whole Foods has always had a synthesis of those two, but over a period of time, one or the other has tended to triumph, kind of like liberals and conservatives tend to oscillate in power in D.C. Healthy eating went on at Whole Foods from at least about 1980 to 1995. Now we’ve had a 15 year run for the foodie philosophy. We are launching a reversal now. We will be moving into food as health.

“I kind of reject the dichotomy that it’s either altruistic or totally selfish. Whole Foods is very idealistic and ideological. But we’re obviously hoping that the customer will think of Whole Foods Market as a place dedicated to selling healthy food. Because Americans are sick of being sick and fat.”

The new healthy eating initiative could be a stroke of genius for the struggling grocer. It could help to further distinguish itself from its competitors, as most supermarkets have at least some organic food offerings. Recently, it would seem Whole Foods has been distinguished mostly by the prices, and Mackey is hoping to continue chipping away at that image WFMI by highlighting special deals and expanding the more affordable Whole Foods store brand, 365.

In combination with the interest surrounding the company’s renewed focus on healthy living, they also reported a decent quarter fiscal 3Q on Tuesday evening. WFMI reported earnings per share of 25 cents, which was a nickel better than analysts expected and a penny better than a year ago. Revenue improved by 2% and Whole Foods raised its full year earnings guidance to 80 to 82 cents. WFMI earned 82 cents in fiscal 2008, and to match that result in this consumer spending environment would be no small feat.

Even thought the stock has appreciated 15.6% today, we are reaffirming our Undervalued stance. The stock is obviously not as cheap as has been recently, after breaking through its 52-week high today, but the fundamentals have started to recover. If Mackey can successfully transform Whole Foods into a nutritional option, then it will be easier for people to justify spending a little extra. Time will of course be the true arbiter of this strategy, but from the outset it seems to have potential to bring WFMI back to the forefront of grocery shopper’s minds.

Whole Foods is Gaining Steam, Not Weight