Changes in the Wind at Wild Oats

BOULDER, Colo.--Wild Oats Markets Inc. is making to cut down on costs and improve its bottom line. After announcing its first quarter results last week--in which the company reported a four percent increase in sales--Wild Oats issued its Form 10-Q to the Securities and Exchange Commission (SEC) assessing the current state of the company.

Even though Wild Oats reported increased sales for the first quarter (four percent over the same period prior), the company experienced a loss in earnings ($118,000) compared to having a net income of $5.3 million in the same period for 2000.

The company also reported a 41.3 percent increase from $7.8 million to $11.1 million in selling, general and administrative costs, which was due to severance costs associated with the CEO transition as well as additions in corporate and regional staff.

A major change in management appears to be the first step in many changes to come. Perry Odak joined the company in March for a five-year term as chief executive officer (CEO) and president after being CEO of Ben and Jerry's. When Odak took his position, he bought 1.3 million shares of Wild Oats stock, equal to five percent of the total shares of common stock outstanding. Mike Gilliland, whom Odak succeeded, owns approximately 11 percent of Wild Oats and remains on the board of directors.

In its Form 10-Q, Wild Oats stated that the number of stores it had planned to open during its fiscal 2001 had been pared down. Although four new stores were opened in Ohio, California, Connecticut and Nebraska, there are plans to open up only one more store this fiscal year; all other store openings have been pushed back until 2002. In addition, a store in Denver was closed since it "did not meet our strategic objectives." Wild Oats, in its report, stated that it expects losses from the new stores (a trend associated with lower gross margins and higher operating costs).

"We are aggressively looking at all aspects of Wild Oats' business for opportunities to improve, strengthen, streamline and reposition its business operations," said Stephen Kaczynski, senior vice president of merchandising at Wild Oats.

Odak added, "While this review of our business may result in some short-term negative impact on the company's operating results, we believe that any resulting changes will have a significant positive impact on the company's long-term, future performance."

On May 30, the Boulder Daily Camera reported that Wild Oats laid off approximately 100 people, about one percent of its staff nationwide, as part of its streamlining efforts. Most of those laid off were based in field offices, while a few were let go at the company's Boulder-based headquarters. The newspaper also reported that Wild Oats' co-founders, husband and wife Mike Gilliland and Libby Cook, loaned the company $2 million at nine percent interest and with no maturity date. According to an analyst who spoke with the paper, placing Odak as CEO may signal an upcoming Wild Oats buyout. The company's chief financial officer (CFO), Mary Beth Lewis, would not issue a statement regarding these changes, stating that the company's statements would be found in its Form 10-Q.

To read more on Wild Oats, visit www.wildoats.com.