Coming off the heels of a weak third quarter, which management claimed was an "aberration" largely because of the long-lingering effects of the Southern California strike, Wild Oats (NASDAQ:OATS) turned in disappointing fourth-quarter results yesterday. The stock was down sharply yesterday and is down more than 50% over the last 12 months.

For its poor top-line results (fourth-quarter comparable store sales declined 3.2% over fourth quarter 2003), the company again pointed to the effects of the strike. It seems that customers who went to Wild Oats during the labor disputes in California returned to their traditional stores once the strike was over. This is different from what happened to industry leader Whole Foods (NASDAQ:WFMI) -- many customers who visited Whole Foods in California during the strike apparently liked the experience enough that they continued to shop there after the strike was over.

In addition to weak top-line numbers, Wild Oats also posted lower margins, for which it blamed higher-than-expected costs associated with its holiday rewards programs -- customers apparently redeemed more rewards than the company had expected, which adversely affected gross profit. Gross profit margin for the quarter was 27.4%, down from 29.4% from the prior year and significantly below Whole Foods' gross profit margin of about 35%.

To me, the negative surprise associated with the holiday rewards program is simply a reflection of poor management and execution, a systemic issue at Wild Oats. Properly implemented and tracked, the financial impact of a rewards program should be well-understood by management and should never result in a negative surprise in profit.

On the call with analysts, management recognized that 2004 was a difficult year for the company and pointed to strategic changes that it is making. One key change is based on a survey of customers that found that many shoppers were not finding everything that they needed at Wild Oats and had to go to a second location -- often a traditional grocery store like Safeway (NYSE:SWY) or Alberstons (NYSE:ABS), or a drugstore like Rite-Aid (NYSE:RAD) -- where they also bought items available at Wild Oats. In response, management has decided to widen the range of products available at Wild Oats. Other strategic initiatives include growing revenues from private label products and upgrading store infrastructure.

To me, this is all too little, too late. In December, Wild Oats brought on Robert Miller as non-executive chairman. Miller has a long background in retail, having served as chief operating officer of Kroger (NYSE:KR), and he has a track record of restructuring ailing businesses.

In my opinion, Miller needs to bring in a new management team that addresses the fundamental problems facing the business. How much longer will Miller and the board stand for disappointing results to continue, along with the excuses that accompany them every quarter? Shareholder value is steadily being destroyed, and the board's patience with current management is starting to look like complacency.

Fool contributor Salim Haji lives in Denver and does not own shares in any of the companies mentioned.