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BOULDER, Colo. - Wild Oats chairman Gregory Mays - who recently stepped in as the natural and organic foods retailer's interim c.e.o. after the resignation of Perry Odak - is already getting down to business of making the healthy foods retailer healthier by shuttering eight underperforming stores so it can invest in existing stores in stronger markets.
"With a sophisticated real estate model in place for our Wild Oats stores and a focus for Henry's growth in Southern California, we intend to continue to invest to grow our brand and our business, including reinvestment in existing stores," said Gregory Mays, chairman and c.e.o. of Wild Oats. "We are building on a strong foundation, and our focus will be to grow sales in existing stores while using our improved real estate model to select high-potential sites for new stores, like those opened so far in 2006."
Wild Oats will close all five of its Henry's Farmers Market stores in Arizona and three additional Wild Oats stores in other markets, effective Dec. 16, and will not open a Henry's store under development in the Phoenix market, the company said yesterday. It will take an asset impairment charge in the fourth quarter for two underperforming Wild Oats stores in other markets, one of which will close when its lease expires in 2007.
After an extensive financial review of its store portfolio, Wild Oats determined these stores are not in optimal locations for sales growth. All of the Henry's Farmers Markets stores in and around the Phoenix area will be closed, including two stores in Gilbert, and one each in Glendale, Peoria, and Phoenix.
The two Wild Oats stores in the Phoenix area, on Camelback Rd. and in Scottsdale, will remain open, and the Wild Oats brand will be the company's focus for future growth in the Phoenix market. Wild Oats stores in the following locations will also be closed on Dec. 16: Village Pointe Center, Omaha, Neb.; Fort Collins, Colo.; and West Jordan, Utah.
Wild Oats said it will reinvest the savings realized from these store closures in its existing store base to drive higher sales performance through marketing, merchandising and operational initiatives. Wild Oats said it expects to incur approximately $25.5 million in restructuring charges in the fourth quarter of 2006 related to asset impairment, severance, and lease-related liabilities. Additionally, in the fourth quarter of 2006, it expects to incur incremental operational costs of approximately $1.7 million related to the closures.
"Henry's is a very compelling chain that fills a unique niche in the Southern California specialty foods market," said Mays. "We believe that the Phoenix stores were not performing at Henry's typically strong levels because of the fiercely competitive nature of the Phoenix food retail market, and the fact that Henry's was a new entrant to Phoenix two years ago. Therefore, we have very little brand awareness in a crowded market."
Wild Oats is focused on growth through new store development, and has 19 leases or letters of intent signed for new Wild Oats and Henry's stores scheduled to open in the fourth quarter of fiscal 2006, in 2007, and into 2008. So far in the fourth quarter, Wild Oats opened two Henry's stores in Southern California and plans to open two more before year's end.
Wild Oats operates 115 natural foods stores in 24 states and British Columbia, Canada under the banners of Wild Oats Natural Marketplace, Henry's Farmers Market, Sun Harvest, and Capers Community Markets.