Whole Foods shakes up board as key sales figure falls again

Whole Foods Market announced a board shake-up and cost-cutting plan Wednesday as it fights to hold onto shoppers who have more choices about where to buy the natural and organic foods the chain is known for.

The Austin-based company made the announcement as it reported that sales fell 2.8 percent at established locations for the three months ended April 9, the seventh straight quarter in which the closely watched metric has declined. Whole Foods has blamed its struggles on customers increasingly turning to “good enough alternatives.” Overall competition is also intensifying, with more places where people can get groceries.

Whole Foods named five new independent directors to its board, including Panera CEO Ron Shaich and Joe Mansueto, the founder of Morningstar. Current director Gabrielle Sulzberger was named chairman, replacing John Elstrott, and Kohl’s executive Keith Manbeck was named chief financial officer, effective May 17. The previous CFO, Glenda Flanagan, announced her plan to retire last year.

Whole Foods also announced a range of moves aimed at improving its financial results, including plans to cut $300 million in costs by its fiscal 2020.

The moves come after activist investor Jana Partners disclosed a stake in Whole Foods last month and outlined an array of issues it wanted to discuss with the company. Whole Foods shares rose 2 percent to $37 in after-hours trading.

As sales have slumped, Whole Foods executives have tried to highlight what distinguishes their chain from rivals. Then in February, the company said it no longer sees the potential for expanding its flagship chain to 1,200 locations, up from the approximately 470 it has in the United States, Canada and the United Kingdom. In Tarrant County, Whoel Foods has locations in Arlington, Colleyville and Fort Worth.

“Over the past 38 years, Whole Foods Market has played a leadership role in fresh, healthy, natural, and organic foods becoming mainstream,” CEO and co-founder John Mackey told analysts at the time. “Now that we have, we must revisit the question of how to best serve all of our stakeholders.”

On Wednesday, Whole Foods said it expects its various initiatives to help sales at established locations turn positive by the end of its fiscal 2018. For this fiscal year, it still expects sales to fall as much as 2.5 percent at established locations.

For its fiscal second quarter, Whole Foods profit fell to $99 million, or 31 cents per share. Not including one-time items, it earned 37 cents per share, in line with Wall Street expectations. Total revenue was $3.74 billion, above the $3.73 billion analysts expected.

This story was originally published May 10, 2017 at 4:59 PM with the headline "Whole Foods shakes up board as key sales figure falls again."