Whole Foods Faces Activist Investor Pressure

Whole Foods hasn't had the best luck lately in the supermarket space, even among competitors who have also felt the pressure of food price deflation.

Now, an activist investor is putting pressure on the company to accelerate its turnaround and explore options for a possible sale. Jana Partners LLC, which has reportedly built up an 8.8 percent stock in Whole Foods, said The Wall Street Journal, is egging Whole Foods on, urging the chain to improve its store technology and operations.

At the news, Whole Foods' stock (WFM) leaped nearly 10 percent to hit a year high of $34.17 in Monday (April 10) afternoon trading. As of the end of the day, the organic grocer's market value got a boost to just under $11 billion.

Jana Partners has already lined up a select group of people who could serve as possible directors, said Reuters, including former Gap CEO Glenn Murphy, former Harris Teeter Supermarkets CEO Tad Dickson and former Barclay's analyst Meredith Adler. A former CMO of Safeway and a food writer are also reportedly working with Jana.

Investors have noted that Whole Foods isn't moving quickly enough to catch up to its rivals, namely Kroger, in in-store and consumer management technology offerings.

The nationwide organic grocer has lost some 14 million customers in the past year-and-a-half to Kroger as it and other stores have rolled out more organic options at lower prices to meet consumer demand. On average, Whole Foods products retail at 13 percent higher than Kroger.

Same-store sales for Whole Foods fell 2.5 percent in the company's fiscal year that ended September 2016, and the company revised down its forecast for the coming year back in February. Whole Foods has had to pull out a number of cost-cutting efforts in the past few months, including ditching its commercial kitchens, leaving behind expansion plans and cutting back to a single CEO.



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