Is Mackey too wacky to be CEO of Whole Foods?—that's the question the media is trotting out in the wake of the Wall Street Journal's recent disclosure that John P. Mackey has couched behind an online alter ego for the past seven years.
Using the handle "Rahodeb," an anagram of his wife Deborah's name, the vegan, organic-food-loving co-founder of the largest natural-foods chain typed out a voluminous 1,100-plus entries on Yahoo Finance's bulletin board, playing cheerleader to his own company, while occasionally skewering its rival, Wild Oats Markets, which Whole Foods is currently in the process of acquiring.
I'm still around observing the chatter. My long-term investment position is intact as is Whole Foods fundamental story. Fluctuations from quarter to quarter are irrelevant to a long-term investor such as myself. Mr. Market's manic/depressive behavior on Whole Foods recently has been interesting to watch but doesn't really matter over the long-term. It was inevitable that Whole Foods same store sales would regress back to their long-term average of 8%. Since the company will be comparing against 10%+ same store sales for the next 3 quarters I don't expect either the comparisons to be very strong (Whole Foods management has guided this way as well) or the stock price to gain very much (unless the stock market itself carries it up with a Bull Market which it might).What is the most interesting thing to me is that Whole Foods is building up its real estate pipeline at a rapid clip. 12 new store leases announced in the last 2 quarters and over 1.2 million sq. ft. of real estate in development. Growth will be accelerating again beginning next year. If the stores in development are good ones (and new leases keep being added at the same rate) then Whole Foods is going to be increasing both its top and bottom lines at a 15% to 20% for the next 5 years. If so, then the stock price will likely double in 4 to 5 years. Good enough for me!
It remains to be seen if Mackey will be written up for any legal shenanigans, though you'd think that the CEO of a publicly traded company would know to be more discreet with what could be construed as insider information, even if he thought he was safe behind the cloak of relative—till now, that is—anonymity.
Of Wild Oats, Rahodeb responded to a posting on March 28, 2006 with the following:
OATS has lost their way and no longer has a sense of mission or even a well-thought-out theory of the business. They lack a viable business model that they can replicate. They are floundering around hoping to find a viable strategy that may stop their erosion. Problem is that they lack the time and the capital now."
Mackey's alias came to light in a footnote in a 40-page court document filed on June 6 by lawyers for the Federal Trade Commission, which is impeding his company's potentially $6.8 billion-per-year merger with Wild Oats on the ground that it would "create a monopoly in the operation of premium natural and organic supermarkets." ::The New York Times and :: Salon