Massive changes at Whole Foods
Whole Foods Market unveiled new and accelerated initiatives to increase profitability, improve operational performance, and enhance shareholder value, including 2020 financial targets. In addition, the company named Keith Manbeck as its new chief financial officer, announced the appointment of five new independent directors and named Gabrielle Sulzberger the new chair of the board and Mary Ellen Coe the new chair of the nominating and governance committee.
“We are accelerating our path to enhanced value creation to deliver better returns for our shareholders,” John Mackey, co-founder and chief executive officer of Whole Foods Market, said in a statement. “Today’s announcement is a powerful combination of accelerated initiatives and new cost savings with clear timelines to deliver. We are on a path to return to positive comparable store sales and earnings growth next year. Our increased dividend and new share repurchase authorization demonstrate our Board’s confidence in our long-term growth strategy and continued ability to generate strong cash flow. The board will continue its comprehensive review of all opportunities to create value. We look forward to continuing our dialogue with shareholders and providing future updates on our progress.”
The company has identified a detailed path to sustained top-line growth, supported by category management and pricing initiatives, enhanced marketing and Affinity programs, and disciplined organic growth. Key components include:
- Accelerating Affinity rollout to all U.S. stores. The new program combines the best elements of the company’s My 365 Rewards and pilot programs, which have successfully driven increased trips and bigger baskets from participants by providing more personalized and relevant communications as well as new digital experiences.
- Restructuring purchasing program and implementing category management across all U.S. stores.
- Returning to positive comps and earnings growth by FYE 2018, and providing FY 2020 financial targets based on the execution of new and accelerated initiatives. For 2020, the Company expects to achieve total sales of over $18 billion and comparable store sales growth greater than 2 percent.
- Realizing $300 million in additional cost savings by FYE 2020.
Sulzberger has served as an independent director of the company since 2003. The company said her years serving on public company boards and experience as a chief financial officer provide Whole Foods Market with financial, M&A and risk assessment expertise. Coe joined the Whole Foods Market board of directors in November 2016 and has assisted Sulzberger throughout the board refreshment process. As an executive at Google, Coe brings deep technology expertise in marketing, digital strategy and brand strategy.
The company's five new independent directors are Ken Hicks, former chairman, president and CEO of Foot Locker; Joe Mansueto, founder and executive chairman of Morningstar; Sharon McCollam, former executive vice president, chief administrative and chief financial officer of Best Buy; Scott Powers, who held leadership positions at State Street Corp. from 2008 to 2015; and Ron Shaich, founder, chairman and CEO of Panera Bread Co.
Manbeck, the newly named executive vice president and CFO, will take on the role effective May 17. He brings to Whole Foods Market more than 20 years of financial and operational experience at leading companies, most recently serving as senior vice president of digital finance, strategy management and business transformation at Kohl’s Corp. Prior to joining Kohl’s, Manbeck served as global vice president and CFO for Nike’s direct to consumer business, which under his stewardship delivered significant gross margin expansion.
“Keith’s proven experience will be a great addition to our team,” Mackey said in a press release. “Keith has a track record of success at leading retail companies, including Kohl’s and Nike, where he led key transformation initiatives with great results. He is a proven leader who knows how to drive strategic change, while maintaining the culture and values that make a company great. We are confident Keith’s financial and operational expertise will allow him to hit the ground running as we move forward with our plan to improve financial and operational performance.”
“I am excited to join Whole Foods Market and help the Company deliver long-term, profitable and sustainable growth,” Manbeck said. “I have admired Whole Foods Market for many years, both as a customer and as an executive. I share the Company’s commitment to delivering nutritious food, a best-in-class customer experience and value for shareholders. I look forward to working closely with the entire Board and leadership team to implement financial strategies to support the Company’s continued growth and success.”