Changes in the Wind at Wild Oats 39291

Changes in the Wind at Wild Oats

BOULDER, Colo.--Wild Oats Markets Inc. is making good on its promises to cut down on costs and improve its bottom line.After announcing its first quarter results in early May--in which the company reported a four percent increase in sales--WildOats 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 (fourpercent 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 periodfor 2000.

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

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

In its Form 10-Q, Wild Oats stated that the number of stores it had plannedto open during its fiscal 2001 had been pared down. Although four new storeswere opened in Ohio, California, Connecticut and Nebraska, there are plans toopen up only one more store this fiscal year; all other store openings have beenpushed back until 2002. In addition, a store in Denver was closed since it didnot meet our strategic objectives. Wild Oats, in its report, stated that itexpects losses from the new stores (a trend associated with lower gross marginsand higher operating costs).

We are aggressively looking at all aspects of Wild Oats business foropportunities to improve, strengthen, streamline and reposition its businessoperations, said Stephen Kaczynski, senior vice president of merchandising atWild Oats.

Odak added, While this review of our business may result in someshort-term negative impact on the companys operating results, we believe thatany resulting changes will have a significant positive impact on the companyslong-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, aspart 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-basedheadquarters. The newspaper also reported that Wild Oats' co-founders, husband and wife Mike Gilliland and Libby Cook, loaned the company $2million at nine percent interest and with no maturity date. According to an analyst who spoke with the paper, placing Odak as CEO may signal anupcoming 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.