Whole Foods Market takes pride in its brand that eliminates any type of colors, artificial preservatives, sweeteners, hydrogenated fats, and flavors in its products. It managed to become the first organic grocer in America. This means that their business follows the National Organic Program standards closely. However, the light performance of the company was just shaken by an aggressive move from Jana Partners. The hedge fund has just purchased a large stake in the company. On top of that, Jana has also shown signs of intentions to ignite some major restructuring reforms.
Jana Partners Became the Second Largest Shareholder
On Monday, Jana Partners purchased almost 9% stake in Whole Foods Market. This made it to become the second largest shareholder. As a consequence, the activist investor has now a voice in the company. In light of this major business move, shares in Whole Foods proliferated 10%. Jana Partners has already affected the entire board by demanding the executives to take a sale into consideration.
During a Monday filing, Jana stated that the market unjustly values the Whole Foods brand. The hedge fund sees the company as an appealing opportunity for investment. The investor group mentioned as well that it has enough expertise in the food industry to propose several major changes.
The spokeswoman for Whole Foods Market, Brooke Buchanan, responded to this statement by a reassurance to shareholders that the company is always up to listening to their proposals. This direction reveals a weaker position for the organization.
Analysts Expect Bolder Moves from Whole Foods from Now on
Over the past six quarters, the company didn’t manage to disrupt a continuous decline. The contributing factors were decreased foot traffic and low average purchases. Together with the fact that the company had to conform to a food price deflation, all these led to an extremely weak performance.
Many analysts believe that by the side of the activist investor, they would see more aggressive measures from Whole Foods Market. Jana Partners claimed that the company has first of all to disrupt the recent history of overall poor performance. Secondly, the board has to go through some changes to refresh the business format. As secondary proposals, Jana is ready to discuss improvements in sectors such as real estate and capital allocation.
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