A private equity firm is buying a 17 percent stake in Whole Foods Market, a much-needed vote of confidence for a chain that is being battered by increased competition and a weak economy.
The news came as the company announced a huge drop in fourth-quarter earnings amid sputtering sales.
Under the terms of the agreement, Green Equity Investors, an affiliate of Los Angeles-based Leonard Green & Partners, will invest $425 million in the company.
“We view it as a strong vote of confidence in our business model and our long-term growth prospects despite the tough current economic environment,” said John P. Mackey, co-founder and chief executive of Whole Foods, in a call with investors on Wednesday. “This equity infusion, combined with our strong cash flow from operations, gives us the financial flexibility to manage through these difficult economic times.”