Whole Foods sales slide easing, co-founder Mackey to become CEO

Wed Nov 2, 2016 6:33pm EDT
 
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By Lisa Baertlein

(Reuters) - Whole Foods Market Inc (WFM.O: Quote) on Wednesday said sales declines at established stores are easing and that its co-founder John Mackey will take over as the company's sole chief executive, sending its shares up nearly 4 percent after hours.

The pioneering organic and natural food grocer said Walter Robb, who has split CEO duties with Mackey for six years, will step aside at year end.

"The streamlining of management is seen as a good thing," said Hedgeye Risk Management analyst Howard Penney, who added that shares likely got a bump from short covering by investors who bet they would fall after the report.

The news signaled a potential turn for the company known as "Whole Paycheck". It has been lowering prices and experimenting with its new, value-oriented 365 by Whole Foods Market chain to fend off competition from traditional supermarket operators like Kroger Co (KR.N: Quote), discounters such as Wal-Mart Stores Inc (WMT.N: Quote) and aspiring grocer Amazon.com (AMZN.O: Quote).

Whole Foods said same-store sales were down 1.6 percent for the first month of the current quarter through Oct. 30. That was less steep than the 2.6 percent drop for the fiscal fourth quarter, which ended Sept. 25, and marked the fifth straight quarter of declines.

Austin, Texas-based Whole Foods, which said customers are buying more items per visit, forecast same-store sales that are flat to down 2 percent for fiscal 2017.

Executives said that deflation and competition pressured revenues, and that Whole Foods planned to step up its advertising, particularly over Thanksgiving and Christmas.

Fourth quarter net income rose 57 percent to $88 million, or 28 cents per share. Analysts had expected a per share profit of 24 cents for the latest quarter.   Continued...

 
A Whole Foods Market store logo is pictured on a building in Boca Raton, Florida March 19, 2016. REUTERS/Carlo Allegri