Whole Foods Market on Wednesday announced a drastic shake-up of its board of directors, replacing five of 12 members in a bid to reassure investors that it is taking action to bounce back from a sustained slump.
The company has posted seven consecutive quarters of declining sales at its stores open more than a year amid an assault from fast-growing competitors.
“We understand that significant change is required at an accelerated pace,” John Mackey, the chief executive, said on a conference call with investors.
The retailer also pledged to take on $300 million in new cost-cutting initiatives, which include rethinking how it staffs its stores and building a more efficient supply chain. And it will accelerate the nationwide launch of an “affinity program,” which includes discount coupons. Pilot versions have driven more trips to its stores.
The company’s financial results underscored why a turnaround effort is urgent. Even though its revenue increased 1.1 percent to $3.7 billion, its comparable sales sank 2.8 percent. A drop in foot traffic was to blame for that decline: Transactions fell some 3 percent in the quarter.
Whole Foods, in some ways, is a victim of its own success. As big-box stores and supermarkets saw the growth Whole Foods was enjoying by offering organic products, those conventional grocers jumped into the market — and often undercut Whole Foods’s prices. Now that shoppers have many more choices, Whole Foods is struggling to snare and retain them.
The affinity program is part of Whole Foods’s effort to attack that problem. The chain is also trying to appeal to price-conscious with a new store concept called 365 by Whole Foods, which has a smaller footprint than a typical Whole Foods and has fewer frills. (For example, it doesn’t have a meat or deli counter.)
Whole Foods stock was up about 2 percent in after-hours trading, suggesting that investors were at least somewhat cheered by the plan.
The new board members include several with deep retail experience, including Ron Shaich, the chief executive of fast-casual dining behemoth Panera Bread; Sharon McCollam, Best Buy’s chief financial officer; and Ken Hicks, the former chief executive of Foot Locker.
Whole Foods also announced Wednesday that it had named a new chief financial officer. Keith Manbeck comes to the grocery chain from Kohl’s, where he was a senior vice president. His appointment comes several months after the grocer had said that Glenda Flanagan, the current chief financial officer, intended to retire.
Last month, Whole Foods Market got some tough love from an activist investor, Jana Partners, which said that the struggling organic grocer needed to take dramatic steps to fix its ailing business. In a regulatory filing, Jana said it intended to have a discussion with Whole Foods about a number of areas of its business and said it was prepared to nominate new members for its board.
The board members named Wednesday were not suggested by Jana.
Whole Foods also named Gaby Sulzberger as its new board chairwoman. She said on a conference call that Whole Foods had interviewed two candidates put forward by Jana. It was prepared to add those people to the board if Jana agreed to a temporary standstill in its efforts to push for change at Whole Foods. Jana declined to “tie their hands” with such an arrangement, Sulzberger said.