Wild Oats Exits Arizona Henry's

JON SPRINGER

BOULDER, Colo. — Wild Oats Markets here last week said it would close all five of its Henry's Farmers Market stores in Arizona, abandon a sixth under construction there, and close three underperforming Wild Oats stores.

The closures, set for Dec. 16, will result in charges of $25.5 million to the company's fourth-quarter financial results, but savings the closings provide would allow Wild Oats to reinvest in existing stores and build new ones, the retailer said.

The closures also illustrate new strategies at work at Wild Oats since board and executive management associated with investor Yucaipa Cos. took over in recent months. Observers told SN last week that they expect additional closings could be revealed in coming months as Yucaipa works to re-shape the company behind larger, more elaborate Wild Oats stores and a stronger presence of Henry's outlets in Southern California.

Under Perry Odak, who resigned as chief executive officer last month after not reaching a new contract agreement, Phoenix was viewed as a growth market for Henry's stores, all of which opened in the last 2½ years.

Henry's will continue to operate in Southern California, the company said. It recently opened two stores there and has plans for two more this quarter.

Those openings would help make up for lost volumes bound for Phoenix out of Wild Oats' Riverside, Calif.-based perishable distribution center, Sonja Tuitele, a spokeswoman for Wild Oats, told SN last week.

“Henry's is a very compelling chain that fills a unique niche in the Southern California specialty foods market,” Gregory Mays, Wild Oats chairman and newly named chief executive officer, said in a statement. “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 market and because Henry's was a new entrant to Phoenix.”

Observers said Henry's struggled in Arizona particularly against Sprouts Farmers Market, which operates 13 stores in the state (see an article on Sprouts in the Oct. 30 issue of SN). Ironically, Sprouts and Henry's share a common heritage. The Henry's chain was founded by Stan Boney, who sold it to Wild Oats in 1999. Sprouts was born when Boney's son purchased two of the Henry's stores back.

Wild Oats stores set for closure next month are located in Omaha, Neb.; Salt Lake City; and Fort Collins, Colo. The company also said it would take impairment charges of $25.5 million for two Wild Oats stores, one of which would close when its lease expires next year.