Slow profits has Whole Foods filling holes
Organic supermarket chain Whole Foods Market is replacing nearly half of its board of directors as the company faces slowing profits and pressure from activist investors to turn things around.
“It’s a preemptive move to fend off the activist,” said Robert Pozen, a professor at the MIT Sloan School of Management. “It’s highly unusual for a board to replace that many directors at once.”
Whole Foods announced the shake-up yesterday that jettisons five members of its 12-person board, filling the slots with those who have more retail experience. Among the new board members are former and current executives from Best Buy, Panera Bread Co. and Foot Locker. Whole Foods also added two new members from an investment backg r o u n d , including former State Street Global Advisors chief executive Scott Powers.
“I want to reassure investors that the board is firmly on the side of shareholder value,” said Gaby Sulzberger, the newly named chairwoman of the board, on a conference call. “Our directors — including our new members — are value creators, deal makers and experienced leaders.”
She is married to Arthur Ochs Sulzberger Jr., the chairman and publisher of The New York Times.
The move comes as the company is trying to regain its edge in what has become an increasingly crowded high-end supermarket landscape. Sales had slipped for six straight quarters. The company has drawn the attention of activist investor Jana Capital, which has been pushing for more experienced board members and higher profits. The new board members are not part of a deal with Jana.
If the fight between Whole Foods and Jana escalates — during the conference call Whole Foods criticized the investment firm for divulging private negotiations to the press — Powers could be called on to sway and woo other big investors who would have to pick a side.