Campbell Soup Company (NYSE: CPB) took a blow after Chief Executive Office Denise Morrison abruptly exited the company earlier this week.
This bad news was accompanied by the announcement of a strategic review even before a new leader has been selected to take Morrison's place, possibly alluding to chaotic decision-making behind the scenes.
Investors, who were also taking in a full-year forecast that fell short of estimates, reacted poorly to the uncertainty surrounding the canned-soup maker. Pessimism on a conference call that followed the results helped push shares down as much as 12% to $34.35, the biggest intraday decline in almost two decades.
Morrison took charge of Campbell in 2011, and is the latest chief executive to fall victim to the slump in the US packaged-food industry that claimed the leaders of Kellogg (NYSE: K) and Mondelez International (NASDAQ: MDLZ). Morrison attempted to move beyond canned soup to ignite sales growth and adapt to changing consumer tastes, but had only limited success.
Campbell's poor performance has continued to such a degree that Moody's, a credit rating agency, has actually downgraded the company. "The sharp and unexpected decline in profitability in the third quarter casts serious doubt that Campbell will be able to meet its deleveraging plans following the Snyder's-Lance acquisition," Moody's analyst Brian Weddington said in a report. "Additionally, the departure of the CEO adds further uncertainty about whether the company will respond successfully to its operating challenges in the near term."
Campbell's stock has fallen 30% since the start of the year. The company's $1 billion of 4.15% notes due in 2028 have dropped 1.6 cents on the dollar to 94.9 since the earnings report.
Keith McLoughlin, a 61-year-old former CEO at Electrolux who has been a board member since 2016, will replace Morrison on an interim basis. The company didn't say who will permanently succeed her, but last month it promoted industry veteran Luca Mignini to chief operations officer, putting him in line to take over the top job.
"It's hard to know precisely what we need in that role until we complete the review," said Interim Chief McLoughlin.
With Morrison's exit, the number of female chief executives in the S&P 500 is down to 23, or 4.6%, according to Catalyst, a nonprofit that focuses on women in the workplace.
Less than a year later after Morrison became CEO, she bought Bolthouse Farms, a maker of fresh juice and salad dressing that also operated a carrot-farming business. The deal was seen as a way to push the canned soup company into fresher and more natural on trend with modern American consumers. But the merger has been hampered by operational issues and a recall.
Campbell has been seeking other sources of growth. In December, the company agreed to buy Snyder's-Lance in a bid to push deeper into salty snacks -- a bright spot in the struggling packaged-food industry. That deal gives Campbell brands such as Cape Cod potato chips and Snyder's pretzels. However, it remains to be seen whether new management will be able to revive its dwindling sales and reputation.