Whole Foods CEO Mackey: Amazon deal will be ‘amazing’ for customers
Whole Foods (NYSE:WFM) founder and CEO John Mackey is stoked about his company’s tie up with e-commerce giant Amazon (NADAQ:AMZN). At least, that’s the impression he gave in a town hall meeting with employees Friday in his only remarks after the $13.7 billion deal was announced the same day.
Mackey said the proposed purchase amounts to the second most-important day in the history of the company, behind only its creation.
“Without a doubt, this is utterly amazing,” Macky, who appeared on stage with Amazon executives, said. “I am, like, super, super excited.”
He likened Whole Foods’ buyout deal with Amazon to a blind date, and recalled a trip six weeks prior to Seattle where the two companies sat down and mapped out ways they could work together. Though the official announcement last week was scant on detail about the future of Whole Foods’ brand – other than to say Mackey would remain in his CEO role and the company’s headquarters would stay put in Austin – Mackey sought to reassure his team the deal is a favorable one for the brand.
He explained that the company would continue to find ways to evolve the business model, including ongoing efforts to implement its customer-rewards program, and said Boston Consulting Group is conducting cost reduction and customer-service analysis aimed at making the transition into one company more seamless.
Whole Foods has struggled in recent years amid increased competition in the grocery-store space as more mainstream brands like Kroger (NYSE:KR), Sprouts (NYSE:SFM) Walmart (NYSE:WMT), Target (NYSE:TGT) and others move to offer more of the fresh, organic food offerings Whole Foods pioneered. The company’s struggle to continue differentiating itself from industry mainstays caught the eyes of activist investor Jana Partners, which pushed the brand to make haste on cost-saving indicatives.
In its fiscal second quarter, the company booked revenue of $3.72 billion on adjusted earnings of 37 cents. Sales at stores open at least 12 months, a key measure of success for retailers, declined 2.8% during the period as transactions dipped 3%. At the same time, Whole Foods said it aimed to book total sales of more than $18 billion along with $300 million in cost savings.
During last week’s town hall, Mackey said the Amazon combination would be “amazing” for customers and employees alike, and put an end to speculation the Whole Foods quality standards would suffer under the Amazon umbrella
“We’re not changing our quality standards. They [Amazon] love our quality standards…they’re not stupid enough to change that,” he said while hinting another brand could emerge from the deal.
“Over time, there could be other formats the evolve that, wouldn’t be branded Whole Foods Market, potentially. It wouldn’t be our standards. But the Whole Foods Market stores and our brands, they’re going to stay all the quality standards we have,” he said, to which Amazon CEO of Worldwide Consumer Jeff Wilke remarked his company would be “crazy” to change them.
“We have been incredibly impressed with the pioneering work that you’ve done over four decades…we have enormous admiration and respect for that. And the worst thing we could do would be to ask you to change it in some discontinuous way. We want you to continue to do what you do best,” Wilke said.
