Natural foods distributor Tree of Life, a Wessanen subsidiary, has announced that it is to terminate its primary supplier agreement with retailer Wild Oats Markets, following mutual disatisfaction with the current arrangement.
Tree of Life said it expected the termination to result in an improvement in 2004 operating results despite a reduction of about $150 million in sales volume.
The companies have been in consultation for a while over issues surrounding the parties' respective responsibilities under the agreement. Rick Thorne, chairman and CEO of Tree of Life explained that "on reviewing the relationship it was apparent that over the near term our collaboration was not likely to meet the expectations of either party. So after much discussion we mutually concluded that it was in both our interests to terminate the relationship."
Tree of Life said in a statement today that the two companies have begun work on a transition plan under which the conversion of Tree of Life from the primary distributor role to the secondary distributor relationship will be complete by March, 2004. Tree of Life added that it has committed to continue to support Wild Oats' stores during the transition.
Tree of Life posted quarterly losses in the first and second quarters of 2003, the first in its 30-year history. It attributed the losses in part to costs associated with the Wild Oats account.