Perry Odak has resigned as chief executive officer of Wild Oats Markets. Odak and the board of directors negotiated for six months before recognizing they were unlikely to come to terms, and it would be best if Odak resigned immediately rather than continuing to work until his contract expired in March 2007, said Sonja Tuitele, a spokeswoman for the Boulder, Colo.-based chain.
Brought on board in 2001, when Wild Oats was struggling under the weight of numerous rapid acquisitions, Odak was often criticized for not competing aggressively enough with Whole Foods Market. "I think he was probably positioning the company for sale along the way and had to keep revenues up," said analyst Scott Van Winkle, managing director of equity research at Canaccord Adams in Boston. Many observers expect the chain to pursue aggressive growth now.
"Perry was a turnaround specialist. I don't think you'd see aggressiveness go down [with a new CEO]," Van Winkle said. Tuitele echoed that logic. "We're in a position where we can really accelerate growth in existing stores and new store development," she said.
However, Van Winkle said, "I don't know that you'll see an acceleration near-term in opening new stores. I think you'd see more consistency in strategy." He noted that the chain's new store model has continually changed, and that many were built on "bad real estate." In the future, the company might pursue strategic alliances with other retailers (such as its recently announced deal to sell Wild Oats-branded products in Price Chopper stores), or a sale of the company, Van Winkle predicted.
Wild Oats has named Chairman Gregory Mays interim CEO and appointed board members John Shields and Brian Devine to an executive committee charged with smoothing the transition while the company launches a search for a permanent CEO.
"[Mays] had the foresight to say, 'I'm still relatively new to the company, I don't have the historical knowledge, so let's develop an executive committee made up of people … who have longevity on the board,'" Tuitele said. Devine joined the board in 1997. Shields has been on the board since '96, when the company went public. Mays, who has 33 years of retail grocery experience, joined the board in July.
Wild Oats has no specific timeframe for selecting a permanent CEO, Tuitele said. "The primary objective that [Mays] has laid out, along with the board, is to make sure they do a thorough and diligent search. [Mays has said] the timetable's not as important as making sure we find the right fit—someone who understands the culture of Wild Oats and the organic and natural lifestyle and has proven operational excellence in natural retail and specialty retail."
In a letter to vendors, Mays outlined his immediate vision for the 114-store company. "Our focus for Wild Oats Markets will be to stay the course that was established by the board and management team," he wrote. "We will continue to focus on growing this business in line with the explosive growth in the natural and organic products industry by building new stores, remodeling existing stores and driving continued comparable store sales improvements, while maintaining our strong bottom-line growth."
While the company's share price initially rose on news of Odak's resignation, it took a dive less than a week later when an analyst with RBC Capital Markets downgraded the stock, saying that sales were below expectations.