Whole Foods to go from co-CEOs to 1, key sales measure falls

NEW YORK, N.Y. – Whole Foods, which has been run by two CEOs for six years, said Wednesday that it is shifting to a single chief executive, and reported that a key sales measure fell for the fifth straight quarter.

Co-founder John Mackey will become the sole CEO at the end of the year. The other co-CEO, Walter Robb, will remain on Whole Foods’ board and be a senior adviser to the company.

The natural foods grocer said sales fell 2.6 per cent at established stores in the fiscal fourth quarter, worse than the 2 per cent drop analysts expected, according to FactSet.

Whole Foods has been hurt by increasing competition from supermarkets, big-box retailers and grocery delivery companies that also sell organic foods and products, sometimes at cheaper prices. This year, it opened its first lower-priced 365 by Whole Foods Market store and launched a digital coupon app for its flagship stores. But the company said it will only go so far with lower prices.

“We are not participating in a race to the bottom,” Mackey said in a conference call with investors. Instead, he said the company is focused on providing better customer service and promoting its “higher-quality products.”

Mackey and Robb have been co-CEOs since 2010, and Robb has worked for the company for 25 years. The company said it will incur a charge of $13 million in the current quarter as a result of Robb’s separation agreement. Also stepping down is Chief Financial Officer Glenda Flanagan, who will retire by September 2017, the company said. She will continue as an adviser as well.

Overall, the company reported net income of $88 million, or 28 cents per share, in the quarter, beating the 24 cents per share analysts expected, according to Zacks Investment Research. It posted revenue of $3.5 billion, which did not meet Street forecasts of $3.51 billion, according to Zacks.

For the full year ending next September, the company said it expects earnings of $1.42 per share “or greater.” Analysts expected earnings of $1.47 per share, according to FactSet. Whole Foods expects revenue growth of 2.5 per cent to 4.5 per cent. Analysts expected a 4.5 per cent rise.

Shares of Austin, Texas-based Whole Foods Market Inc. rose $1.09, or 3.8 per cent, to $29.60 after the market closed Wednesday. Its stock is down about 15 per cent so far this year.