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Whole Foods Announces Strategic Update, Five New Board Members, and New CFO

Whole Foods Announces Strategic Update, Five New Board Members, and New CFO

Thursday, May 11th, 2017

All eyes remain on Whole Foods as rumors continue to persist of a potential buy-out of the company. In the meantime, Whole Foods has released its own strategy for growth and shaken up its leadership appointments; replacing five Board members, naming a new chairwoman, and a new Chief Financial Officer.

John Mackey, Co-Founder, Whole Foods Market“We are accelerating our path to enhanced value creation to deliver better returns for our shareholders,” said John Mackey, Co-Founder and CEO. “Today’s announcement is a powerful combination of accelerated initiatives and new cost savings with clear timelines to deliver. We are on a path to return to positive comparable store sales and earnings growth next year. Our increased dividend and new share repurchase authorization demonstrate our Board’s confidence in our long-term growth strategy and continued ability to generate strong cash flow. The Board will continue its comprehensive review of all opportunities to create value. We look forward to continuing our dialogue with shareholders and providing future updates on our progress.”

Keith Manbeck, Incoming CFO, Whole Foods MarketKeith Manbeck has been named as the new CFO for the retailer, as disclosed in a press release. Manbeck would be stepping into his new position, effective May 17, 2017, bringing 20 years of financial and operations experience with him, according to Most recently, Manbeck served as SVP of Digital Finance, Strategy Management, and Business Transformation at Kohl’s Corporation. In his role at Whole Foods, Manbeck will be looking to help the company engage in an accelerated plan to enhance shareholder value. 

Further boosting its new operational focus, Whole Foods has announced a sizable reshaping to its Board of Directors. As the company appoints five new faces and a new leader to the Board, the Wall Street Journal speculated that this move was made in an effort to show that the chain is open to change, and resultant of efforts to “fend off a potential Board fight with activist investor Jana Partners, LLC.” As we previously reported, Jana Partners scooped up an 8.3 percent stake in Whole Foods, and there has been speculation that the group is pushing the retailer for a sale. 

Gabrielle Sulzberger, Chair of the Board, Whole Foods Market (Photo Source: Ford Foundation)Whole Foods has also named Gabrielle Sulzberger as its new Chair of the Board, and Chair of Nominating & Governance Committee. Sulzberger has served as an independent director of the company since 2003, according to a release, in addition to serving on public company boards. Through her experience, she is able to provide Whole Foods with financial, M&A, and risk assessment expertise.  

The Board of Directors at Whole Foods will now encompass 12 Directors. 10 of these are independent, with 6 having been replaced within the last 7 months. In a release, Mackey disclosed that the five new appointments will position the company well for its next stage of growth. The Members are as follows: 

  • Ken Hicks: former Chairman, President, and CEO of Foot Locker. Bringing over 29 years of marketing and operational experience to the role.
  • Joe Mansueto: Founder and Executive Chairman of Morningstar, and executed more than 30 strategic acquisitions during his tenure.
  • Sharon McCollam: former EVP, Chief Administrative, and CFO of Best Buy. Bringing nearly 20 years of experience as a retail senior leader.
  • Scott Powers: former EVP of State Street, and President and CEO of State Street Global Advisors, with more than 30 years of executive experience and shareholder insights.
  • Ron Shaich: Founder, Chairman, and CEO of Panera Bread with over 35 years of CEO experience.

The New York times stated that this Board Member refreshment, and new CFO, comes from the company’s restless shareholders, including Neuberger Berman. The source cited that Jana Partners was urging Whole Foods to select four new nominees, with Whole Foods opting for its own five appointments. 

Whole Foods Storefront

The company also announced the following updates as it looks to gain more ground in the buy-side sector:

  • Accelerated Affinity Program rollout to all U.S. stores by end of 2017
  • Restructuring purchasing program by end of 2017
  • Implementing category management by end of fiscal 2018 to all U.S. stores
  • Updated total sales goal of over $18 billion by 2020
  • Positive comps and earnings growth by fiscal year end of 2018
  • Realizing $300 million in additional cost savings by fiscal 2020

The company also reported a total sales increase of 1.1 percent to a record $3.7 billion, net income of $99 million, in addition to other movement in its 2017 Q2 that can be viewed here. Seeking Alpha reported that the retail beat expectations on its revenue by $10 million

Will these strategies help the retailer boost its growth, or is a sale still in Whole Foods’ future? Deli Market News will report as the news unfolds.

Whole Foods