Whole Foods Gets Breathing Room -- WSJ
2017年5月13日 - 4:03PM
Dow Jones News
By Heather Haddon and David Benoit
Whole Foods Market Inc. sought to head off a shareholder fight
by naming new board members equipped to handle activist investors
and provide advice on making potential acquisitions.
But the grocery retailer may nonetheless find itself in a
protracted fight in coming months with activist investors who
question whether the additions will create the change they have
demanded.
Whole Foods, which has been struggling with the longest sales
slump since the natural grocer went public in 1992, said a slate of
new board members with deep experience in retail or finance will
take their seats on Wednesday.
Activist hedge fund Jana Partners LLC, now the company's
second-largest shareholder, and mutual-fund giant Neuberger Berman,
which owns 2.7% of the stock, are viewing the changes cautiously.
The investors have been pressing Whole Foods to consider a sale and
add directors with experience in retail operations, technology,
finance and real estate.
The new board members should provide Whole Foods with hands-on
expertise in keeping shareholders pleased in retail's
hypercompetitive environment, said Douglas Ehrenkranz, an executive
recruiter for Boyden. "They've all been there and done that," said
Mr. Ehrenkranz, who specializes in food retail.
Whole Foods' stock, which has lost nearly half its value since
peaking in 2013, rose 2.1% on Thursday, as Wall Street analysts
largely responded favorably to the changes, which were announced
late Wednesday.
One of Whole Foods' incoming board members, Panera Chief
Executive Ron Shaich, can offer recent experience in handling
shareholders who protested the fast-casual chain's hefty
investments to upgrade its technology. When an activist investor
stepped up, Mr. Shaich quickly agreed to cut costs and take on debt
to buy back more shares, but didn't back down from his technology
upgrades. The company and investors say his quick action helped to
avoid a proxy fight.
Joe Mansueto, the billionaire founder of Chicago
investment-research firm Morningstar Inc., brings his experience
with acquisitions to Whole Foods' board. Those deals, including
private market-data firm PitchBook Data Inc. and financial-wellness
planning company HelloWallet Holdings Inc., helped Morningstar grow
incrementally in line with its mission. The other board selections
are former executives at footwear retailer Foot Locker, electronics
retailer Best Buy Co. and trust bank State Street Corp.
Charles Kantor, a portfolio manager at Neuberger, said the board
additions make the company stronger. "No stone should be left
unturned in their comprehensive review of all opportunities to
create value," he said after Whole Foods unveiled its selections on
Wednesday.
Some activists are questioning why no grocery experience is
being added, people familiar with the matter said. Jana raised the
possibility of seeking a shareholder vote on more board changes as
soon as this summer.
Jana had advanced its own slate of board members, and Whole
Foods accepted two of its picks on the condition that the hedge
fund agreed to hold fire for two years, according to people
familiar with the matter. However, Jana declined the offer, and
there is no settlement between the two sides.
The new board members supplant Whole Foods loyalists, who had
served on the board for more than 15 years on average. The five on
the way out include Chairman Dr. John B. Elstrott, the co-founder
of grocery, environmental and technology companies, according to
spokeswoman Brooke Buchanan. Also leaving the board next week are
Morris "Mo" Siegel, co-founder of the Celestial Seasonings Inc. tea
company; Jonathan D. Sokoloff, manager partner of the Leonard Green
& Partners LP private-equity firm; Ralph "Bud" Sorenson,
managing general partner of the Sorenson Limited Partnership
venture capital fund; and William "Kip" Tindell, the recently
departed chief executive of Container Store Group Inc.
Investors will be looking for the company's performance to
improve in the coming quarters, said Chris Mandeville, a food and
convenience retail analyst for Jefferies LLC. "If they don't make
progress in the coming quarters, investors will grow concerned and
they could shift their interests to Jana," Mr. Mandeville said.
Whole Foods on Wednesday reported another quarter of weak sales,
with another in same-store sales. The key retailer metric fell 2.8%
for the April-ended fiscal quarter, following on a 2.4% decline in
the previous quarter.
Whole Foods officials said its discussions with Jana continue,
and that it expects to see its sales turn positive next year.
--Julie Jargon and Sarah Krouse contributed to this article.
Write to Heather Haddon at heather.haddon@wsj.com and David
Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
May 13, 2017 02:48 ET (06:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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