BOULDER, Colo. -- The naming of veteran retail executive Robert Miller to chairman of Wild Oats Markets should be a positive addition for the natural foods retailer based here, but analysts said it was too early to tell whether the hiring portends any changes in philosophy or strategy for Wild Oats.
Miller, the former chief executive officer of Fred Meyer and more recently, Rite Aid, was named non-executive chairman of Wild Oats last month. He replaces John Shields, who previously announced he would step down as chairman. Miller headed Fred Meyer from 1991 until it was purchased by Kroger in 1999. After a brief period as vice chairman and chief operating officer at Kroger, Miller in 1999 became CEO of Rite Aid, helping to lead the Camp Hill, Pa.-based drug store chain out of scandal.
Miller, who was unavailable for comment last week, brings knowledge of Western U.S. markets and experience in strengthening retail businesses to Wild Oats, which has experienced sales and margin pressure recently and has underperformed its own earnings expectations. Though Wild Oats has been the rumor of mergers with conventional stores in the past, three analysts contacted by SN said they had doubts that such a deal would be likely at this time, saying real estate and execution issues at Wild Oats would likely discourage suitors. However, they agreed Miller's experience would be an asset as Wild Oats searches for ways to attack those areas.
"Bob Miller has a good record of revitalizing companies and is familiar with many of the Western markets in which Oats competes, so I would take the hiring as a sign that the board of directors feels management needs a bit of beefing up," said Gary Giblen, director of Research for C L King, New York. "I think it's a step in the right direction because management does need beefing up. The question is, is it enough beef?"
Giblen dismissed speculation that Miller's arrival would help a merger with a conventional chain as "preposterously overstated."
Andrew Wolf, analyst for BB&T Capital Markets, Richmond, Va., said Wild Oats needs to address its real estate before it can become attractive to a strategic partner.
"Around half their stores are just not well-located. They have to have good physical assets first, because if they don't have that, they don't have the necessary conditions to be a good company," Wolf said.
Wild Oats earlier this year announced an agreement to test in-store branded natural departments at certain Stop & Shop stores. "Is the addition of Miller the second inning of pursuing strategic alternatives? I suppose that's something that all struggling companies have to consider," Stephen Chick, vice president of JP Morgan, New York, told SN. "But my speculation is that bringing in an industry veteran like Bob Miller will help Wild Oats' knowledge base because they are clearly struggling.
"He has a wealth of experience in transactions -- the Fred Meyer sale to Kroger was pretty successful," Chick added. "And I think he and his team did a good job keeping Rite Aid afloat when they had management problems and high levels of debt."