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Whole Foods, as it announced quarterly same store sales that were down 2.8 percent, said yesterday that it has a plan to reverse a negative trend in its business, including a reduction in prices and an expansion of its nascent rewards program.

Barron's reports this morning that "Whole Foods plans to offer new incentives to shop, including an expanded rewards program that could save shoppers money on their purchases. Whole Foods already has a program called Rewards 365, but its new initiative would be more extensive and personalized to each shopper. CEO John Mackey has said before that he wants to focus on rewarding dedicated 'Whole Foodies' who already love the store rather than put all his efforts into wooing new customers.

"Whole Foods, long known for premium prices on many goods, will also look to cut prices after first reducing its own costs, the company said. When those price cuts will come is still not clear. But they could help the company shed its 'Whole Paycheck' reputation."

These moves, the company believes, could help it return to growth.

“We understand that significant change is required at an accelerated pace,” John Mackey, Whole Foods' CEO, told investors in a conference call.

Bloomberg reports that investors "are eager for signs that Chief Executive Officer John Mackey can respond to the worst sales slump in more than a decade," especially since he took total control of the company by moving out former co-CEO Walter Robb. Much of this is prompted by Jana Partners, an activist firm, which "announced it had taken a stake in the company and would push for changes, including possibly a sale of the company. Jana, which is threatening to shake up the company’s board of directors, assembled a team including former retail and grocery executives to help figure out how to fix Whole Foods."

Among the companies rumored to be interested in acquiring Whole Foods are Kroger and Albertsons, though neither has confirmed any desire to buy the company.

Among the personnel changes announced yesterday:

"Gabrielle Sulzberger, a private equity executive, will become the company’s chairwoman," the writes, succeeding John B. Elstrott Jr., who has served on the Whole Foods board since 2009 and will step down as chairman. "Keith Manbeck, a former vice president of Kohl’s, will become the company’s new chief financial officer," the Times writes, succeeding the retiring Glenda Flanagan.

Among those joining the Whole Foods board, the Times reports, are Ronald Shaich, the founder, chairman and co-chief executive of Panera Bread Company. The other new directors are Ken Hicks, a former chief executive of Foot Locker; Joe Mansueto, the founder and chairman of Morningstar; Sharon McCollam, a former chief financial officer of Best Buy; and Scott Powers, a former vice president of State Street Corporation ... Whole Foods also brought Mary Ellen Coe, the vice president of sales and product operations at Google, onto the board.

"The defensive maneuvering," the Times writes, "comes as Whole Foods, an organic foods pioneer that helped change the way Americans shop and eat, faces the greatest crisis of confidence in its 37-year history. It also underscores the growing influence of activist shareholders, who continue to press corporate executives."

The Times also reports that Jana, "arguing that the board was stale and in need of fresh blood, proposed a slate of directors that included Glenn Murphy, a former chief executive of Gap Inc., and Mark Bittman, a former food columnist for The New York Times. Each of potential directors bought their own stakes in the company. Whole Foods tried to broker a peace with Jana, offering to accept two of the hedge fund’s nominees if Jana would refrain from publicly agitating for change for two years. Jana refused, a spokesman for the hedge fund said."
KC's View:
Forgive me, but I have very little confidence in the ability of John Mackey to do what has to be done in order to fix the problems at Whole Foods. This is not to diminish his legacy - in so many ways, he has pretty much invented this category, and it is his vision that has defined all the positives that Whole Foods represents. That's no small thing.

But the time has come to bring in a new CEO who can make the company a lot more efficient while leading the people there in a way that keeps the mission and the vision intact. (He'll probably hate me for suggesting this, but ... Where have you gone, Jim Donald?)