- Whole Foods announced it's replacing five of its 12 current directors with individuals who have retail and financial experience at companies such as Panera Bread and Foot Locker. The organic and natural foods retailer also named a new chairman, Gabrielle Sulzberger, who has served as an independent director for more than ten years, according to The Wall Street Journal. Sulzberger also is a principal at investment firm Rustic Canyon/Fontis Partners LP.
- The natural grocer also appointed a new chief financial officer, Keith Manbeck, who has previous stints at Kohl's and Nike.
- Whole Foods privately offered to add two of Jana Partners' nominees to its board of directors, but the activist investor declined, as this would have restricted its efforts to push Whole Foods into a sale.
This news comes during one of the most tumultuous periods of Whole Foods' company history. Both Jana Partners and mutual-fund manager Neuberg Berman, which collectively own more than a 10% stake in the organic and natural grocer, have pressured it to sell and add directors with experience in retail operations, finance and technology to its board. This corporate shakeup hints the company may be finally ready to consider a change.
"We understand that we need to do much more, and faster," said John Mackey, Whole Foods' chief executive officer, during the company's second quarter earnings call.
The new board members share a wide range of retail and financial experience. New directors include Scott Powers, a financial executive formerly at trust bank State Street Corp; Ron Saich, the founder of Panera; Ken Hicks, former chairman and CEO of Foot Locker; Sharon McCollam, a former executive at Best Buy; and Joe Mansueto, the founder of investment research company Morningstar.
Whole Foods expects more directors to retire before its next shareholder meeting, but did not name any individuals.
This overhaul marks a step forward for the company, but Jana is still seeking further changes. On Wednesday, the activist hedge fund announced the possibility of a shareholder vote on additional board changes in the coming months.
“We will now be watching carefully to see how they address the management issues at Whole Foods and to ensure that the board is seriously pursuing all avenues to maximizing shareholder value,” a Jana spokesperson told The Wall Street Journal.
Whole Foods reported a same-store sales decline of 2.8% during its second quarter —the seventh straight period of same-store sales declines for the company. These results were slightly better than Wall Street expectations, which predicted a 3% drop.
Mackey, who founded the company more than thirty years ago, has been reluctant to make major changes in the past. Some analysts predict he will resist a sale for as long as he can. Still, reshuffling the company's board of directors is no small change, and could signal changing sentiments.
Both Kroger and Albertsons have been rumored to be potential buyers. Kroger, the largest conventional grocer in the U.S., has been encroaching on Whole Foods' natural and organic market share for the past few years, and analysts say that a purchase would give Kroger access to new, high-value shoppers it's been seeking.
Albertsons faces similar hurdles. The supermarket chain, which has reportedly been considering an acquisition of Sprouts Farmers Market, is already shouldering more than $20 billion in debt, and a Whole Foods acquisition would plunge it even deeper into the red. Still, Whole Foods could help the company snag a public offering, which it has sought for the past few years.
Others suggest a private equity firm may be the best sale option for the struggling grocer. Only time will tell if the retailer finally concedes to a sale — and to whom.