By Heather Haddon

Whole Foods is severing ties with delivery service Instacart Inc., as the natural supermarket chain's owner Amazon.com Inc. expands its own delivery efforts.

Instacart said Thursday that it would cease deliveries from 76 Whole Foods locations on Feb 10. The San Francisco-based company said around 240 employees would be laid off as a result. Most of the 1,415 Instacart employees that pick up orders from Whole Foods stores will be transferred to other divisions, founder and chief executive, Apoorva Mehta, said.

A representative for Whole Foods didn't immediately respond to a request for comment.

Amazon's purchase of Whole Foods last year has been a boon to Instacart in other ways. Other retailers have hired Instacart to deliver groceries to their customers as they race to improve their e-commerce offerings. Instacart now works with more than 300 retailers across 15,000 stores.

Amazon, in turn, has lost some delivery contracts with other grocers since its Whole Foods purchase. Arizona-based Sprouts Farmers Market Inc. earlier this year switched from Amazon to Instacart as its delivery provider.

Instacart in October secured a $600 million investment that raised its valuation to $7.6 billion from $4.4 billion. Instacart executives have said they are considering an initial public offering.

Instacart has delivered groceries for Whole Foods since 2014. Whole Foods in 2016 made a small investment in the startup.

Whole Foods executives have said offering delivery through Instacart made some of their customers more loyal.

Amazon's has expanded delivery from Whole Foods stores to more than 60 cities. Delivery and discounts for members of Amazon's Prime subscription service have pushed up sales at Whole Foods, the company has said.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

December 13, 2018 13:40 ET (18:40 GMT)

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