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Whole Foods CEO Says Jana Partners Is Out To 'Destroy' His Reputation, Spread Propaganda

Whole Foods CEO Says Jana Partners Is Out To 'Destroy' His Reputation, Spread Propaganda

For years, Whole Foods Market, Inc. (NASDAQ: WFM) was the industry darling.

But deflating food costs and heightened competition from the likes of Sprouts Farmers Market Inc (NASDAQ: SFM) and Kroger Co (NYSE: KR) prompted the halving of Whole Foods’ share value between 2013 and 2015. Same-store sales declined for six consecutive quarters, while traffic waned 3 percent. Then in February, management announced cancellation of its plan to open 800 new stores.

So activist investor Jana Partners LLC intervened. The firm took an 8.3-percent stake in Whole Foods in April and began urging exploration of a sale and proposing turnaround strategies.

'Greedy Bastards'

Whole Foods CEO John Mackey has since attributed the ensuing struggle to conflicting philosophies: his of “conscious capitalism,” wherein businesses advance missions and serve purposes beyond creating share value, and Jana Partners’ of “greedy, short-term financial capitalism,” which prioritizes amassing money as quickly as possible.

“Yes, we need to evolve,” Mackey said in a Texas Monthly interview. “We need to get better, and we’re doing that. But these guys just want to sell us, because they think they can make forty or fifty percent in a short period of time. They’re greedy bastards, and they’re putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it’s in their self-interest to do so.”

Analyzing Jana’s Strategy

Not only that, but Mackey accused Jana of intentionally timing its play to rattle management and pressure change from the start.

“They hijacked my book tour,” he said. “It’s not that I think that they were trying to harm the book tour. It’s just like, ‘Okay, the CEO is going to be distracted. He’s not going to be able to give full attention to this.’ ”

At the risk of focus shifting from the promoted book toward the Jana stake, Mackey’s public relations team canceled media appearances.

“We were reeling,” Mackey says. “I hadn’t even had a chance to talk to my team. We didn’t have any bankers in place. These guys just—it was like kicking you below the belt. Usually when these things happen, you get fair warning. They let you know, ‘Hey, we’re going to be buying some stock. I want to meet with management.’ ”

Related Link:

Sell-Side’s View On Whole Foods’ New Activist Investor Slightly Cautious


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