Whole Foods Market is facing pressure to make big changes after Jana Partners, the activist hedge fund and second-largest shareholder in the company, attacked Whole Foods’ management, distribution, and analytics strategy in a filing with the Securities and Exchange Commission Monday.
The hedge fund “took broad aim at the company for the way it has conducted business,” reports the New York Times, targeting deficiencies in customer service and the handling of its brand development, among other issues with the organic supermarket chain.
“Our biggest criticism is that management has not moved fast enough to reposition the company,” the analysts said in the filing.
Jana also proposed four new board nominees including former New York Times columnist Mark Bittman and former chief executive of Gap, Inc. Glenn Murphy, both of whom are partnered with Jana.
“We value constructive dialogue toward our shared goals of creating shareholder value, successfully executing on our strategic priorities and taking actions that will position the company for continued success,” Whole Foods Market said in a statement.
The organic grocery chain’s share price has slid substantially over the past two years, as specialized and generic competitors alike expand their organic offerings. Stores such as Costco and Walmart, offering lower prices than the chain that has been nicknamed "whole paycheck," have taken a large chunk out of the organic food market, causing Whole Foods to lose the strong lead it once held.
“What’s happened in the natural food sector is that the world has changed very fast around it,” Joe Dobrow, the author of “Natural Prophets,” a book about the history of health foods, told the New York Times. “Now there isn’t very much that is unique to Whole Foods anymore.”
Whole Foods has taken several steps to modify its business recently in light of its financial troubles, including a November decision to get rid of a dual chief executive structure and a February decision to close nine underperforming stores.
Shares in Whole Foods jumped by nearly ten percent after the announcement of Jana's filing.