What You Need to Know About the Shake-up at Whole Foods Market Inc.

The high-end grocery chain’s second-quarter earnings release was overshadowed by news that it was putting five new, independent directors on its 12-member board.

Motley Fool Staff
Motley Fool Staff
May 17, 2017 at 10:48AM
Consumer Goods

In this segment from Motley Fool Money, Chris Hill and Ron Gross discuss the big changes at Whole Foods Market (NASDAQ:WFM). A flurry of new independent directors have been added to the board, so reading the tea leaves, do these drastic changes indicate where the company might be heading?

A full transcript follows the video.

This video was recorded on May 12, 2017.

Chris Hill: Whole Foods second-quarter results weren't nearly as interesting as the company's shake up in the boardroom. Whole Foods announced five independent directors, and that private equity executive Gabrielle Sulzberger will become the new chairman of the board. CEO John Mackey is on our board here at the Motley Fool. Ron, I'm not saying Whole Foods couldn't benefit from some fresh thinking, but I wasn't expecting this.

Ron Gross: They were under attack by Jana Partners. Barry Rosenstein over there, activist investor, pretty good guy, actually and a good investor. They took this move to combat that. So I wasn't that surprised. They put some good guys, Panera CEO, on the board. I think it was necessary. The business is just not doing well. Seven consecutive quarters of negative comps. I do like the move to that smaller 365 concept, but there's only four of them. They're hopeful, and we'll see how the rollout goes. New blood on the board is great. Jana is saying we could have used some grocery experience, however. That they did not get.

Hill: You got Ron Shaich, who just took Panera private. You have a private equity chairman of the board now. Do you think this increases the likelihood that Whole Foods is going to put itself up for sale in the next year or so?

Gross: I think, also, the founder of Morningstar is on the board. They'll help facilitate offers and look around out there. I don't think we'll see that anytime soon. I think they'll stay independent.