Investor group wants to shake up Whole Foods

Pioneer of organic-food movement is losing share to mainstream supermarkets

Whole Foods Market Chief Executive Officer John Mackey was supposed to spend this week celebrating the release of his new book, a paean to vegan eating that debuted Tuesday.

Instead, he’s facing a looming battle with Jana Partners, an activist investor that bought a stake in the grocery chain and is now threatening to shake up the board, overhaul operations — and possibly push for a sale.

Decrying Whole Foods’ poor performance, Jana has enlisted a team of food and retail luminaries that includes former CEOs from Gap and Harris Teeter.

The investment firm also tapped food author and former New York Times columnist Mark Bittman as a consultant, a sign that Jana is ready to dig into the nitty-gritty of organic produce.

Jana’s blitz on Whole Foods sent the shares up 10 percent. Before the gain, the stock had climbed just 1 percent in 2017, lagging the 5.2 percent gain of the Standard & Poor’s 500 Index.

Investors are betting that Jana can either fix Whole Foods or sell it for a good price.

The investment firm disclosed an 8.3 percent stake in a filing, saying it would seek talks with management and push for a review of Whole Foods’ strategic alternative

The clash follows Whole Foods’ worst sales slump in more than a decade. Despite helping pioneer the organicfood movement, the grocery chain is increasingly losing share to mainstream supermarkets.

The Austin, Texas-based company said on Monday that it is “open to the views and opinions” of its investors.

Jana named three potential board nominees who could be part of a proxy fight next year: Glenn Murphy, who previously ran Gap; Thomas Dickson, the ex-CEO of Harris Teeter who helped sell that chain to Kroger Co.; and Meredith Adler, a former equity analyst who serves as a food consultant.

With this team of experts scrutinizing Whole Foods, Mackey is under more pressure to shape up the company quickly. A central question is whether the 63-year-old executive can handle day-to-day operations. Until the end of last year, he shared the CEO job with Walter Robb.

When Mackey began running Whole Foods on a solo basis, he took full responsibility for rehabilitating a business that he co-founded in 1980 with a single store. Mackey built the company into an organic-food powerhouse, but it’s not clear how he will turn it around now.

“He’s been fantastic at building the brand, but you wonder if he has the bandwidth to be the operations guy, too,” said Jennifer Bartashus, an analyst at Bloomberg Intelligence.