Whole Foods (WFM) shares rallied on Wednesday afternoon after the company released its quarterly results and announced some big changes.
The grocery chain said comparable store sales fell 2.8%, which was the seventh straight quarter of declines. However, it was better than the 3.1% decline expected by analysts. Net revenue came in at $3.7 billion and earnings per share came in at $0.37, which were both in line with expectations.
Additionally, the company also boosted its dividend by 29% and authorized a new $1.25 billion share buyback program.
Management also announced it was cranking up its efforts to turn business around. Specifically, it said it would accelerate the rollout of its loyalty programs to all U.S. stores by the end of the year. The aim is to drive more traffic and encourage bigger baskets.
By 2020, management expects to achieve annual sales of over $18 billion with comparable store sales growth greater than 2.0%. They also expect to see $300 million in additional cost savings by the end of 2020.
“We are accelerating our path to enhanced value creation to delivery better returns for our shareholders,” CEO John Mackey said in the release. “We are on a path to return to positive comparable store sales and earnings growth next year. Our increased dividend and new share repurchase authorization demonstrate our Board’s confidence in our long-term growth strategy and continued ability to generate strong cash flow.”
Shares were up 2% following the news.
Mackey has been under pressure by activist investors to respond to lackluster results.
In mid-April, activist investor Jana Partners revealed it had built a 9% stake in the company and raised the possibility of a sale. Mutual-fund giant Neuberger Berman, which owns almost a 3% stake in the company, has also pressed the company for a sale. According to the Financial Times, Whole Foods hired Evercore Partners as an advisor to review business operations and also explore a potential sale.
Before the quarterly earnings were released, the company announced the appointment of five new independent directors and new board leadership in an effort to show it is open to change. They included former Footlocker CEO Ken Hicks, Morningstar founder and Executive Chairman Joe Mansueto, former Best Buy Co CFO Sharon McCollam, Panera Bread founder and CEO Ron Shaich, and State Street Global Advisors CEO Scott Powers.
The company also announced a new CFO, Keith Manbeck.
Whole Foods shares traded as high as $65 in October 2013 before seeing the price fall to just under $28 per share. More recently, the stock has risen on the speculation of a takeover.
Nicole Sinclair is markets correspondent for Yahoo Finance.
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