Why Whole Foods Market, Inc. Soared Today

Jon Howard
April 12, 2017

Yesterday Whole Foods Market shares jumped more than 10 percent after Jana Partners disclosed it had become the second-largest investor in the company; however, shares lost roughly one-third of the gain today. (NASDAQ:WFM) was up +9.98% ($3.1) to $34.17 and showed a volume of 27.26 mln shares.

The Austin-based chain has been dealing wih its worst sales slump in more than a decade.

Jana in a filing with the Securities and Exchange Commission Monday said it acquired an 8.3% ownership stake in Whole Foods for approximately $721.2 million. "Going forward, Whole Foods Market will focus on serving this growing niche of customers better than ever before". On average, equities research analysts forecast that Whole Foods Market will post $1.32 earnings per share for the current fiscal year.

US wireless carrier AT&T Inc said it would buy Straight Path Communications Inc, a holder of licenses to wireless spectrum, for $1.25 billion in an all-stock deal. It also said the investor has "substantial experience analyzing and investing in the grocery sector and more broadly across the food and retail sectors".

The grocer reported same-store sales were down in each of the last six quarters. "Whole Foods Market welcomes investment in the Company and is open to the views and opinions of all of our shareholders,"a Whole Foods spokeswoman told Fortune in an e-mailed statement".

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In what the source says could be a signal that Jana is willing to get aggressive in its approach to shake up the retailer, Jana has already lined up potential new board nominees, all of which it named in the SEC filing.

In the short term, it will be worth following the impact Jana has on Whole Foods.

"And in our view, the main problem Whole Foods faces - heightened competition - is hard to fix", he added.

It may be hard for Jana to improve the performance of Whole Foods in the short term, said Brian Yarbrough, an analyst at Edward Jones. (WFM) may be overvalued, however, this can also depend upon the situation of the market; if the market is strong then it could suggest that Whole Foods Market, Inc.

Jana announced its plans to push for change long before the company's annual meeting which is not expected to occur until early next year.

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