- Snyder’s-Lance shares finished down 15% on Monday after the company reported that CEO Carl Lee Jr. had unexpectedly retired, according to the Charlotte Observer. He had been at the company for almost a dozen years.
- Brian Driscoll, the former CEO of Diamond Foods, will become the Charlotte-based snack maker’s interim CEO. He previously served as a member of Snyder’s-Lance’s board.
- The company announced its earnings — set to be reported next month — are likely to be far below expectations, potentially 13 to 14 cents a share instead of the projected 27 cents a share, according to The Wall Street Journal. Chief Financial Officer Alex Pease told The Wall Street Journal the company wasn't happy with its performance. “Under Brian’s leadership, we are moving aggressively to take the actions necessary to improve earnings,” he told the newspaper. “Specifically, we are focused on improving cost of goods productivity, net price realization, and accelerating our zero-based budgeting plans.”
Surprising shakeups are never a good sign for a company. And neither is news that the company is preparing for struggles in the year ahead.
Driscoll's experience as CEO of Diamond Foods make him a smart replacement for the time being. He knows the snacks segment and has experience in the larger Snyder's-Lance corporate structure. Many believe he is already a favorite for keeping the job and leading the company in the years ahead.
"We see great potential in the strategic direction of the company and are excited to have access to Brian’s talent and experience to bring the company to the next level of performance,” Snyder's-Lance Chairman James Johnston said in a written statement.
The $1.9 billion acquisition of Diamond Foods in late 2015 was seen as a way for the snack company to boost its profile in the better-for-you space. And last year, it contributed to what was seen as a success for the CPG company. Although its core brands had been slumping, last November the company reported quite a turnaround, with a 41.3% increase in net revenue and 2.6% branded category growth.
Many things could have contributed to Snyder's-Lance's change in fortunes and strategy. The company's longtime CFO stepped down at the end of May last year, which opened the door to big changes — or discovery of things that could be done differently.
However, the move toward zero-based budgeting marks a definitive shift in how Snyder's-Lance runs its business. Cost-cutting was always one of the company's growth pillars, but zero-based budgeting is an extreme form of this strategy. While it has brought growth for large companies like Kraft Heinz and Campbell, it's also brought job cuts. It will be interesting to see if this move turns around Snyder's-Lance's fortunes, as well as what the future holds for the snack manufacturer that was once seen as a prime acquisition target.