Burkle’s Sowing of Wild Oats Hints at Potential Turnaround

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In disclosing that he had a 9.2 percent share of Wild Oats Markets Inc., L.A. billionaire Ron Burkle cast a vote of confidence for the natural food chain that has struggled in a segment dominated by Whole Foods Market Inc.


Burkle, who has made a career of buying and selling major supermarkets, is being watched closely in the industry because many suspect that he will not stay a sideline investor.


“There is no question that Mr. Burkle has a storied history of doing successful deals in the supermarket industry,” said Ed Aaron, an analyst with RBC Capital Markets. “I think his ownership gives at least some endorsement of his view of Wild Oats as a potentially successful turnaround story.”


In a filing with the Securities and Exchange Commission, Burkle’s investment firm, Yucaipa Cos., called the shares “undervalued by the market at the present time.” The stock has swung widely in the last year from lows of around $6 in October 2004 to a high of $15.37 on April 12, 2004. In the last month, shares have jumped 52 percent to around $10.50.


The filing came in the same week that he announced the purchase of a 40 percent stake in Carteret, N.J.-based Pathmark Stores Inc. for $150 million. Pathmark has 142 stores in the northeast.


Major supermarket chains are interested in the natural food grocery sector because it generally isn’t subject to the same discount-induced price pressures that have squeezed mainstream supermarket profit margins. Last year, Albertsons Inc. acquired Bristol Farms, the high-end Southern California chain.



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The full version of this story

is available in the April 4 edition of the Los Angeles Business Journal.

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