Whole Foods Market will no longer operate under a co-CEO structure, with Co-Founder John Mackey exclusively taking the reins on Jan. 1, 2017. Walter Robb, presently co-CEO with Mackey, will serve as a senior advisor to the company and remain on the Board of Directors upon transitioning.
The executive changes come as Whole Foods Market aims to turn around a struggling business that has seen organic market share taken by Kroger, Walmart, Trader Joe’s and Sprouts Farmers Market. The health foods grocer also unveiled its Q4 and end-of-year earnings results, revealing:
Q4 total sales increased to a record $3.5 billion;
Q4 comparable store sales decreased 2.6%, a fifth straight sales decline within stores; and
Q4 net income was $88 million, an earnings per share (EPS) of $0.28, beating Thomson Reuters estimates of $0.24.
For the 2016 fiscal year, total sales increased 2.2% to $15.7 billion, but comparable store sales decreased 2.5%.
In an investor call, Mackey noted that although the company is expanding its rewards pilot, already established in the Philadelphia and Dallas Fort-Worth markets, as well as growing its value-oriented 365 by Whole Foods stores, the brand is not interested in making deep discounting a primary priority. Instead, Mackey indicated the retailer’s strategy would be “leading a race to the top in terms of a differentiated customer experience and continuing to raise the bar in our quality standards and selection. We believe we have the right strategies in place to position the company to produce strong results and returns for our shareholders over the long term.”
While competition in the natural/organic sector remains tough, grocers across the board have felt the pressure of food price deflation in 2016. This means extended discounts are likely out of the question for Whole Foods, even as it aims to shed its “Whole Paycheck” reputation.
“In a year that presented many headwinds for food retailers, we made measurable progress on positioning our company for continued success while producing industry-leading sales per gross square foot and healthy returns on invested capital,” Mackey said in a statement.
Whole Foods said it expects sales growth for fiscal 2017 to be in the range of 2.5% to 4.5%, while same-store sales are projected to range from flat to down 2% for the year.
Additionally, EVP and CFO Glenda Flanagan, the longest-serving female Chief Financial Officer in the Fortune 500, will retire from her role at the end of the 2017 fiscal year. Like Robb, Flanagan will continue to serve the company in a senior advisor capacity after retirement.